| MARKET ROUNDUP | |
| Dow | +67.78 to 17,137.36 |
| S&P 500 | +10.06 to 2,007.71 |
| Nasdaq | +20.61 to 4,582.90 |
| 10-YR Yield | +.013 to 2.461% |
| Gold | +$2.90 to $1,269.40 |
| Crude Oil | -$0.99 to $93.46 |
Sometimes in this business, things can come out of nowhere and smack you over the head. That’s certainly the case with this morning’s jobs report from the Labor Department.
Virtually every piece of economic data we’ve gotten lately has been strong. In some cases, we’re talking about the best readings in a decade or more! Even the private ADP jobs report earlier this week came in toasty, if not piping hot.
But according to the gubmint, the economy created just 142,000 jobs in August. That was below the average estimate of 230,000 and the weakest reading in 2014. Retail and manufacturing were two sectors that showed relative weakness.
So does that mean we’re headed back into the drink? Well, not exactly. Look behind the headlines and you see that other parts of the report were fairly encouraging. Average hourly earnings rose another 0.2 percent … the unemployment rate dropped to 6.1 percent from 6.2 percent … and the number of employees out of work for 27 weeks or more fell to the lowest since January 2009.
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| Today’s jobs data failed to meet expectations, but the unemployment rate did slip to 6.1 percent. |
Frankly, the muddled numbers reflect the comments I’m reading right at our very own Money and Markets website. One commentator recently said his company is the busiest it’s been in four decades … while another said the economy feels like it never exited recession.
I think one primary reason is that the biggest spoils of the recovery have gone primarily to the “fat cats.” The Federal Reserve’s own research shows that the richest 10 percent of Americans saw their average income rise 10 percent between 2010 and 2013. But those in the bottom 40 percent of America saw their inflation-adjusted income fall 5 percent to $46,700.
As for who holds this nation’s wealth, it’s increasingly concentrated at the top. The upper 3 percent of America hold just over 54 percent of the country’s wealth, up from less than 45 percent in the late 1980s. The bottom 90 percent of American own just under a quarter of the country’s wealth, down from 33 percent.
So does August’s job market stumble equal a stock market tumble? It’s tough to say in this topsy-turvy world. You’d think stock investors would like a stronger economy, because that leads to greater sales and earnings growth.
But in a stimulus-addicted world, “bad news” might be “good news” because it pushes out central bank tightening a bit further. And sure enough, stocks reversed early losses to close higher.
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“This nation’s wealth, it’s increasingly concentrated at the top.” |
Personally, I will repeat the mantra I’ve been using for months. Things aren’t going gangbusters here in the U.S. of A. But they’re a lot better than they were when the markets and economy were collapsing in 2007-2008. They’re also a lot better than they are in Europe or Japan. And select industries such as domestic energy, aerospace, chemicals, steel, and autos are doing very well.
So I’m going to keep my nose to the grindstone there, seeking out winners and avoiding losers — all with the help of our Weiss Ratings. I suggest you do the same unless and until we see major signs of a trend change in the markets.
Just like I did last month, I’d like to ask for more of your on-the-ground perspectives on the job market in the wake of this latest government report. Are conditions bad and getting worse? Good and getting better? Something in between?
Also, what does it mean for your investing approach? Will these kinds of numbers just keep the easy money taps open forever? Or are they an aberration, and not enough to derail the Fed’s recent drift towards tougher talk?
Hop on over to the Money and Markets website to weigh in!
| OUR READERS SPEAK |
Feisty discussions on the euro currency, the wages of average Americans, and more continue at the website.
Reader Jeff weighed in on the minimum wage issue, saying: “I believe it is here that you may be out of touch with us, everyday Joe Paycheck Americans. Big business has had their way with us for as long as I care to remember.
“The problem with the economy is simple, not enough wage growth to support the expansion that most desire. While I make a good living being a professional engineer, I am forced to perform the duties of several other positions that have been eliminated, all in the name of increased productivity.
“My wife works much harder than I do serving coffee for a national grocery store chain that prides itself on paying minimum wage and basically treating people, their employees (associates), like crap. This is the real America, the profits go to the wealthy, the slave labor goes to the employee.”
Jeff went on to cite everything from rising health costs and taxes to hidden inflation, then implied that many people (myself included) don’t know what it’s like to work for low pay in this economy.
Jeff, it’s not that I don’t understand what it’s like to work long hours for low wages. I started mowing lawns and doing other yard work for a few bucks a week as a kid. I bagged groceries at age 14, bussed tables at 15 and 16, and worked all the way through college to help cover my bills.
Heck, I can remember when my restaurant paystub put my hourly wage at $2.12 and a half cents per hour! Yes, we got a share of the tips to get us up to the minimum wage level at the time in the early 1990s. But we’re still talking chump change.
My point these days is that we do need to see higher wages in America. But is printing up trillions of dollars in Fed funny money actually accomplishing that goal? I don’t think so.
As for a higher minimum wage, I don’t necessarily have a problem with it if it’s a reasonable increase. The risk is that if you implement too large of a hike, it just convinces employers to cut the number of workers to offset the higher pay rates they’re doling out to those who are left.
Meanwhile, Reader Howard weighed in on monetary policy in the wake of yesterday’s big move by the European Central Bank. He said:
“What these central bankers may or may not realize is the total lack of confidence most people have in the success of their policies. They are stimulating longer term poverty, not wealth creation. Policies that promote dependence and entitlement to families, while creating confusion in everyone else who relies on sound economic values and growth.
“What an abject failure global money printing has been. These bankers are destroying people’s lives and with the support of elected and unelected officials.”
Howard, I agree with you that all of this money pumping hasn’t done much for the “real” economy — even as it has obviously helped inflate the “asset” economy. That’s great for the 1 percenters, who can afford to build swimming pools shaped like Stradivarius violins and $400 million-plus condos in Monaco … not so much for everyone else!
As for derivatives and banks gambling with the public’s money, Reader Dan S. said: “Why not have reasonable reserve requirements on banks for asset obligations like CMOs, derivatives, and other contracts?
“With $280 trillion outstanding, the sum is definitely significant! Banks do not seem limited in owning these assets by not having reserve requirements. There must be a price to maintain these based upon the risk of holding these. After all, the banks owe an obligation to the insurers of their assets, the U.S. taxpayer. This idea that it is their money with which to do as they please does not reflect proper reality.”
Good points, Dan. The unfettered growth in derivatives over the past decade and a half is a major risk to bank stability, and it still hasn’t been effectively dealt with.
Don’t forget to add any other thoughts you might have at the website here.
| OTHER DEVELOPMENTS OF THE DAY |
 Is peace breaking out in Ukraine? Yeah, that’ll be the day! Every previous agreement between pro-Russian rebels and Ukraine President Petro Poroshenko has collapsed in a hail of bullets, so I’m highly skeptical of the latest cease-fire discussions.
The firm could face fines of as much as $17.6 billion, above and beyond the $24 billion it has already spent. That, in turn, could lead it to sell more assets to raise money — though it’s worth pointing out the fines could take years to determine, appeal, and ultimately, pay.
Personally, I’ll be at Sunday’s New England Patriots-Miami Dolphins season opener. Looking forward to cheering my Pats on — even if it’s going to be a thousand degrees in Sun Life Stadium! LOL.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
Mike Larson
P.S. Martin presented 2 very urgent video briefings this week, designed to not only insulate your money, but also guard your safety and your family’s wellbeing! If you missed these, please click here now to watch!
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 33 comments }
Speaking as the controller for the company I work for I would say that business has improved. We are somewhere slightly above the middle of the range of great to terrible.
the world is corrupt and getting worse take for instance the keystone pipe line who do you
think would get killed by the pipeline being built let me see how about warren buffet and his railroad 30.00 dollars per car to move oil or 10 dollars if the pipe line were built. who do you think was a big democratic donor and fund raiser ? you guessed it good old warren
makes George soros look like a nice guy. if the golfer won’t built the pipe line for environmental reasons is the answer .think again. the whole system is bad. good luck we will need it.
It is sad to see a guy like Jeff so frustrated. He doesn’t know what he doesn’t know. There are so many who are in the same boat. Unfortunately how the whole system works isn’t taught in schools because most teachers have no clue either. Therefore it has zero chance of improving. He’s blaming all the wrong people and pinning his hopes on those who have caused the problem. There is a way out, but no easy way out.
Our government policies favor those at the top. The Wall street bailout led to bonus checks for those who took advantage of poor government oversight and policies. Allowing 30 million illegals to enter the country to permit big business to have cheap labor and/or endear one’s candidates to the Hispanic population depresses wages, particularly at the bottom rungs of the economic ladder. One of ten workers in California is illegal and these people are willing to work hard. The democrats in many states are beholden to teachers unions and in too many school districts terrible teachers cannot be fired. If you are not satisfied with your current income you can either invest in protests or in furthering your own education.
What does this mean for stocks such as TBF, TBT and TMV? When Bonds are still hot these loose out.
I liked your history of mowing lawns and waiting tables at low hourly wages. I started working pulling weeds in a truck garden at age 10 at 0.05 per hour and mowing lawns with a push mower and watering the lawns for 15-20 hours at the railroad depot for $3.50 per week. A national minimum wage would have abolished my jobs. My how things change but then not all change is progress and never will be.
CJC
GREED: HOW AMERICA HAS LOST ITS WAY
Come on, lets get real. I recently interviewed two real persons working for a real company in my area ( home town). Here are my findings, in summary.
The real company is UPS. I interviewed two delivery drivers on my street this week, briefly but got a boat load of useful intelligence. Let me explain:
There are three UPS delivery drivers working my area based out of the Santa Clarita, CA Sort Center ( or Hub). The all are working 60 hours per week, 5 days a week, 7:00 AM to 7:00 PM. The company is obviously emphasizing employee productivity to the max. They are probably not alone in this way. However, it does not end there. Calls to the UPS customer service center ( “Call UPS”) have a 3 minute wait time ( “Q”) due to “high call volume” ( Corporate speak translation: short-staffed). So, a bigger picture begins to emerge.
UPS management has decided to push its employees as far as they can go and hire as few additional employees as possible to maximize quarterly profits (short term) and minimize costs, especially (union) labor costs. Here is the real issue: Apparently, Management has decided to make their mark by all and any means necessary. This is fast becoming an ethical problem for them and for America in general.
Current Dept. of Transportation Regulations ( DOT) limit the number of hours any delivery driver holding a commercial driver’s license can legally work to a statutory maximum of 60 hours/week. UPS has reportedly already paid millions of dollars in fines and penalties to the Federal government according to one driver for exceeding this statutory limit of 60 hours. UPS is pushing their employees as hard as possible.
A driver just delivered a package to me and I asked him about this matter. He told me “some drivers are still driving 65 hours a week”. So, UPS management has apparently made a conscious and willful decision to ignore the Federal regulations and continue on, accepting the possibility they will face future sanctions ( monetary penalties) IF caught.
The last time business ethics like poor or commonplace was back in the seventies, between 1974-1980. It did not turn out well for us then, and it is unlikely to end well for America now. We are running towards trouble as fast as we can. This is a way bigger “problem” than the ones we think we currently have.
So, by so doing, we have consciously increased the odds we are ALL going to “get it”, eventually. So, better take more precautions while you can. It could get real turbulent in the future if we don’t soon change our national course or attitudes (values). It is unlikely we voluntarily will without another hard lesson coming up in the next few years. Too bad for the people, very unfortunate for them.
Entry level jobs are not a career. That’s why they’re called entry level and are designed to be pass through employment. All businesses must have certain low skill tasks performed at low cost. To complain that an employee who parks himself in one of these positions for the duration can’t provide for a family of four is ludicrous. There is of course room for advancement for the industrious worker. At the much maligned WallMart 70% of middle management started out at hourly wages. No other company on the planet can make that claim.
If corporations could not charge off luxury autos, airplanes, (Buffett doesn’t need one) “conferences” in Palm Beach or Maui, and billions upon billions of unnecessary expenses, wages could grow without real damage to the bottom line. Shareholders would get more too.
And the politicians who ok their acts….off to jail.
The real kicker of every slimy move the banks make to steal more of your hard earned money is simply that the American taxpayer bailed tis slime out, and we no sooner bailed them out than they were back to screwing “Joe Citizen”.
Bankers should be sent to JAIL for the irresponsible way they treat investor’s money.
While the economy flounders. the political system has revived the writing of high risk home mortgages through the Home Loan Bank board which has started selling these loans off these loans to maintain it’s liquidity. Here we go again 2007-08 allover again in spades.
Harry Dent tells us loudly that a DOW bust to 3000 is ready to go boom.
I’m not taking the bait. It has t do with the 10 year cycles shifting due to QE.
Has Weiss any counter commentary. I know that Safe Money Larson is not in the bust camp. Ken Fisher isn’t either.
This should be a lesson to all that the only way to get rich is to invest in the stock market. You don’t have to start with a lot, you just need to be vigilant and dollar cost average over a long period of time. The average annual return since 1950 has been 12%. Don’t waste your time with gold or speculative investments, get in the market and get in now. The sooner you do, the richer you will be.
Good For Stocks – Up Strong Yesterday.
Break out is on Correction is long time over – S&P 2150 Target.
It keeps rolling Higher.
As our government goes about claiming to be righting past wrongs, it is usually on the wrong side of everything that really counts; no regulation where regulation is needed and over-regulation everywhere else. Bank regulation – rather the lack of bank regulation – is an example. Banks should be banks…not gambling casinos backed by the full faith and credit of the taxpayers.
Amen
The government job growth numbers are a sham. This lawn cutting, bed pan cleaning, and diploma selling economy is corrupt. John Williams of government statistics tells a different reality. Young educated people can not find good jobs. The money printing is ripping off the savings of seniors. The recovery is a 1% reality. The casinos in NJ are closing. The money printing supports crony capitalism. Eric Cantor found a good job. He works for a hedge fund that he helped make rich. Chelsea quit a 600,000 job. Wow!
A quick comment on Obama’s rant about raising the min wage so that all Americans can support their family and lead a “dignified” life. The min wage was never intended to provide support for a family. It was intended to provide a minimum entry level salary , and in the process prevent employers from taking advantage of young people as they enter the workplace If the wage keeps increasing these entry level jobs will inevitably be replaced by technology. .Our President should be more in tune with the unintended consequences of his actions.
Economy getting better? With temporary services, no benefits, lower wages, temporary workers working over 2 years for the same companies? Better? Look around. Europe is Bankrupt, and we in the USA. Are dead and do not know it. From deflation, to hyperinflation, to a worthless fiat dollar, to war on the horizon someplace, hold cash, guns ammo, food, medical supplies, as that’s the way to prepare today. Most important, call on God through His Son to help.
Sooner or later, it will be “torches and pitchforks time”, if the screwed over ever find a real leader (like MLK, had he not been killed by the powers that be…..
My experience with big business. I worked as a nurse (RN) at a hospital (Penrose Hospital in Colorado Springs – let’s give them full credit!) and came down with a bad gall bladder. One of the hospital’s surgeons botched the operation. I went septic, was in a coma for three weeks and almost died a couple times. The kind, caring, Catholic-healthcare-chain hospital’s response? They FIRED me, “because I could no longer do the work”!!. The health insurance went away a month later and my family was “bare” for the next four years. I’m surviving on Social Security Disability, Medicare and the VA. Another American success story!!
Hi Mike:
Recently, when the Dow dropped over 600 points, Larry Edelson’s forecast appeared to have been right. However, the resurgence to further Dow and S&P 500 highs needs to be investigated more fully.
In my 2008 book, Universal Numbers and the Number 9 Destiny of Humankind (Amazon), I included a chapter that reveals and validates the importance of numerology and astrology (planetary influences) in global economics…..and actually, all activities of humankind. Indeed, based on the 2008 transit of both Pluto and Jupiter in Capricorn (the big business sign), I was able to predict the September 17, 2008, “financial catastrophe” (my term in the book) within 17 (number of suffering) days because retrograding Jupiter would turn direct at the end of August. I also stated that “derivatives” (the Grand Casino) would be involved.
As the Edgar Cayce spiritual source advised when asked (while he was in an altered state of consciousness) if a horoscope had any value, the source replied, “It would be well for everyone to study astrology, but do it aright.” Like most uninformed people, I had always dismissed or at least ignored astrology prior to this Cayce reading. I was reminded that “Criticism, without investigation, is the height of ignorance!”
My metaphysical studies and experiences during the past 38 years have convinced me that everyone should have a natal numeroscope (deals mainly with the SOUL) and a natal horoscope (deals mainly with the triangular personality of the entity) created so that we truly and fully can know ourselves. As the Cayce spiritual source strongly advised, “Study self; study self; study SELF!” The Holy Bible also advises this course.
Hi William
Do you have any reasoned or sensible argument to explain the direction of the markets, because this blog of your makes no sense at all.
Hi Mike
I forgot to explain what seems to be happening now with Wall Street and the price of gold. The “traditional summer rally” for the stock market is induced by the Sun-in-Leo influence from July 22 to August 22, annually, because Leo pertains to speculation and risk-taking, and Leos are “party people”. As for gold, when Nixon removed the gold standard in August of 1971 (a TIME number 18 world year), a new gold chart was erected, with Leo now being the Sun Sign of gold. The Sun-in-Cancer (frugality) induces a low point for gold in early August, which annually should be a good time to buy gold and its stocks because of the Leo effect.
The reason why Wall Street is still partying now is because mighty, expansive Jupiter also is now in Leo (until August, 2015), and this influence could keep stocks up until the Scorpio effect (death and rebirth) during October 23 to November 22 (each year). However, the margin debt situation now could precipitate a sharp sell-off at anytime.
As for gold and its Leo Sun Sign, this also indicates that gold should begin a powerful rise that should surprise the whole world of finances/economics, especially as the Dow reaches it elastic limit to result in a catastrophic failure!
Hi William
Your book sounds like a bunch of baloney.
Hi Mike:
Since 3 is the WHOLE number (think Holy Trinity), I was just reminded to add one more factor regarding the month of September. The Sun-in-Virgo transit (very serious work and health influence) from August 22 to September 22, creates enough anxiety and fear to induce frugal people to buy gold and silver as the only real forms of money. Hence, September annually is a good month for gold, and historical evidence supports this fact.
As for the PM investor philosophy, “Sell in May and walk away”, Sun-in-Taurus (the money and value sign) from April 21 to May 21 obviously is the reason for the annual May sell-off. Then, the Gemini and Cancer combined influences keep gold prices down until the August-Leo reversal’, annually—under relatively normal conditions.
Hi William
What a complete load of Tosh. Where do you think this all fits with the alignment of Uranus.
I have heard a statistic about how many people are giving up their US citizenship and moving to other countries. Where are people going? What are some other countries that might be good to move to? Should we stay put and hope for a day when there will be a definite improvement in our own country? I would like to hear some thoughts on this.
Hi Muriel
There was a time when people stood up for what was fundamental to their beliefs. There are other countries, but we can’t all run away. Maybe our fellow citizens will wake up one day and elect a group who put our country first, or that is the sincere hope.
Muriel,
The number of people that have actually renounced US citizenship last year is only about 3,000 – out of a total population of over 300,000,000 = 0.001 %, and many of them had dual citizenship anyway.
Ignore the media hype !!
I have written on prior occasions that America is a three act drama, i.e., a tragedy. Act 1. was manifest destiny; act 2. was exceptionalism; act 3. is comeuppance and is well underway. Like Ben Johnson’s plays the majority of the audience is being entertained but oblivious to the developing tragedy. Comeuppance has been recently published as a $100 trillion meltdown of the economy and a 25 year depression.
El duce, the emperor and der furher provided motivation to bring an end to the Great Depression of the 1930’s. WWII gave rise to the military industrial complex. The Apollo moon landing was the apex of exceptionalism. The Vietnam War and the Laffer curve were the beginning of Act 3. Robert McNamara, LBJ, RWR, Alan Greenspan, A.E.Newman and Elmer Fudd were key players. When the curtain comes down on act 3, the majority of the audience will be oblivious to the tragedy but they will feel the pain. Those few who have a coherent and informed political belief system will say, “I told you so, but no one would listen.â€
It is not rocket science that we are in this mess today…… It had it’s start in 1982 with the Republican Revolution, Reagan’s enormous tax breaks to his wealthy supporters without cutting spending, millions of good Middle lass jobs exported to the Far East and Mexico, which broke the American Labor movement, the needless war in Iraq, the emergence of our own 21st Century “Gobbles” by the name of Rove, the farthest “Right” court since 1929, “Citizens United” that allowed the wealthiest to “Buy” the elections with billions of “Liar Attack Political Ads”, the removal 1n 1999 of the financial safeguard called Glass-Steagall which stopped the Crash of 1929 and kept the Banks in order by those powerful Republicans called Gramm/Leach/Blyle, etc, etc….
We’ve been here before in the 1920’s when the Republicans were in the majority…. that came to an end in 1932 after the Crash of 1929 brought the Great Depression and left the average American in much the same position he is in today…… When the GOP has been swept from the political scene, the average American will begin to do better, just as they did from 1932-1982……..
I was hoping for a change of though, how do we join them and become the coyote and not the sheep?