每日市场点评 --- February 1, 2008

The stock market started the new month in a rather positive tone. The biggest headline news is probably Microsoft’s $44.6 billion offer to acquire Yahoo!, marking it the largest technology acquisition ever(The AOL-Time Warner deal back in 2000 was an acquisition in the media industry not in the tech industry) . The news sent the futures immediately higher. However, economic news today was quite mixed. The January nonfarm payrolls dropped 17K compared with 70K consensus and this was the first decline in more than 4 years. The number for December, however, was revised up by 64K while November’s number was revised down by almost 50K. It is quite possible that January’s number will be further revised in the next few months. Nonetheless, the trend of the job market was quite clear: After creating on average 150K new positions every month in the past two years, the job market has slowed to around 70-80K recently. The odds of a 50bps cut in the Fed’s March meeting jumped to more than 80% from yesterday’s below-70% level following the news. The ISM Index number, on the other hand, came at a stronger reading of 50.7 compared with 48.4 consensus, indicating the manufacturing sector is still expanding. Interestingly, it was the previous month’s ISM report that shocked investors and was partly responsible for the sharp sell off in the equity markets around the world in January. US dollar got strengthened against major currencies today while gold gave back some of the recent gains. One final note: The rates that banks charge each other dropped sharply following recent Fed rates cut and Term Auctions. For example, the 3-month US LIBOR is currently at around 3.11 percent compared with around 4.70 percent one month ago, signalling liquidity is back to the banking system.