The Week Ahead: 7/29/07 to 8/4/07
Sunday, July 29th, 2007After last week’s sell-off I would expect to see some buying opportunities this coming week, especially if you’re looking to invest for the long-term and not just a quick trade. It may be a while before the indices climb back up to their record levels seen earlier this month.
On Friday, August 3rd, the unemployment rate and nonfarm payroll data will be released by the Commerce Department. I’m expecting the results to be in line with the market expectations. If the unemployment rate comes in even slightly lower you will probably see a brief end-of-the-week rally on Friday due to last week’s sell-off.
Investors will be willing to shrug off short-term concerns of subprime mortgage woes if the unemployment rate is declining and therefore the economy is actually doing better. Those subprime borrowers are still employed in the aggregate sense if the unemployment rate is dropping! If the unemployment rate comes in higher than expected, which I doubt will be the case, you will see another repeat of last Friday… more selling despite an otherwise healthy economy.
With all the news about the real estate market not expected to rebound until 2008 or even 2009, the sluggish real estate market and its affect on homebuilders, big box retailers like Home Depot, and durable goods manufacturers like Whirlpool should all have those concerns already priced into the stock. Therefore you can only stand to profit if the real estate market stages a come back prior to 2009. I don’t want to be misleading though, if 2008 and 2009 are down years for real estate again, these same stocks could have farther to fall.
As always, I welcome your feedback and comments… have a great week!
