Had lots of viewers today ask whether the 500 point stock market drop today was the market reaction to the Obama victory. I don’t think it was. People have not yet focused on the tax rate issue. My guess is that is was people swooping over the ADP report. The job report this week is going to suck big time.
This is the issue I was writing about in an earlier post. Jobs are almost entirely a small and mid sized private company issue–public companies never increase net jobs. And private companies are totally dependent on their bank or private equity lender for the working capital they use to meet payroll. Banks are now under huge pressure from the regulators to reduce their outstanding loan commitments by the end of the quarter. And the regulators don’t particularly care how they do it.
Translation? The job market is now going to get a lot worse even before the Obama tax rate increases are factored in. More on that tomorrow..