Market Falls Before Jobs Report


If you’ve got a job hang onto it with both hands. That’s the growing feeling among many Americans. Layoffs seem to be making headlines almost every day. And it could get worse before it gets better.

How Many More Job Losses?

Late words suggest that Friday's government payrolls report could exceed current expectations for 320,000 job losses in November.

Mike Darda, MKM Partners chief economist warns investors to be prepared for as many as half a million job losses in November.

The data giving him, and many other economists, cause for concern comes from the Institute for Supply Management which said its index of non-manufacturing businesses dropped to the lowest in the survey's 11-year history.

"This is consistent with payrolls falling by about 500,000; let's hope it is very wrong," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Market Reaction

If Darda and Shepherdson are right, then look out below. “The market could experience sticker shock” which would send indexes tumbling.

However, Tim Seymour sees the situation a little differently. He thinks the market has already priced in a lot of the bad news. He says, if the number comes in around estimates the market could rally a bit.

Going forward?

Darda tells Fast Money that he expects unemployment to climb higher in 2009. “The best case scenario in the next 12-18 months will be unemployment being slightly higher than 8%,” he says.

“You navigate it through time,” he tells the traders. “It’s just going to take time for the unbalances to unwind.”

For the investor, that means to be conservative. “I think you want to be defensive in terms of your sector selection.”

You can find our entire interview with Mike Darda at the end of the Word on the Street video.

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Trader disclosure: On Dec. 4th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MSFT), (WMT), (UUP), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (FCX); Najarian Owns (NUE) And Is Short (NUE) Calls; Najarian Owns (CIT) Calls; Najarian Owns (SBUX) Call; Seymour Owns (AAPL), (BAC), (BX), (F), (MER); Seygem Asset Management Owns (RIO)

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