It’s another jobs Friday folks – and as much as I wish I could tell you the news was wildly bullish or horrendously bearish, I just can’t. It was another month of “Meh” data.
Market Roundup
Let’s start with the positives. The U.S. economy created 215,000 jobs in March, slightly above the 200,000 average forecast. Revisions to the past couple of months were negligible at minus-1,000, while average hourly earnings rose 0.3%. That was an improvement from the previous month’s 0.1% decline.
Looking a bit deeper, you find that the labor force participation rate ticked up slightly to 63% from 62.9%. Within industries, the retail sector added 48,000 jobs, construction added 37,000, healthcare added 37,000, and food service added 25,000.
So what’s the negative story here? Well, that job growth of 215,000 was a deceleration from 245,000 jobs in February. And the unemployment rate rose to 5% from 4.9%.
|
|
| A mixed picture when it comes to the U.S. employment situation. |
Plus, the manufacturing sector lost a whopping 29,000 jobs – the single-worst month for the sector since December 2009. Mining also shed another 12,000 workers, bringing cumulative losses since the September 2014 sector peak to 185,000.
The other data of the day was also mixed. The ISM Manufacturing Index rose to 51.8 in March from 49.5 in February, topping estimates. But construction spending dropped 0.5% in February, much worse than the 0.2% gain that was forecast.
Major automakers like General Motors (GM) and Ford Motor (F) also missed sales estimates in March. That underscores the “peak auto” risks I’ve been discussing for several months.
Bottom line? We’re still not getting an “all clear” or “look out below” signal from the job market data. But my research suggests we’re late in the credit and economic cycle. The problems in sectors like manufacturing, mining and autos also highlight the risks involved in investing in the wrong stocks, sectors and risky bonds at this point in the cycle.
[Read More – The Consequences of Reckless Lending – Mike Larson]
So I’m doing several things now to help guide you through these treacherous and volatile market times …
First, I’m getting ready to unveil my new documentary, “The Unseen Hand.” It will explain what impact the presidential election and other powerful influences will have on the markets. Just click here to get registered, and to enter our Election-Year Sweepstakes.
Next, I’m sharing my thoughts about the recent action in gold, mining shares, and monetary policy in an upcoming special webinar titled “The Next Phase for Gold, and How to Profit from It.” It’s set for this coming Monday, April 4 from 2:00 p.m. to 2:45 p.m. EST. All you have to do is register online here, then tune in on Monday.
| “We’re still not getting an ‘all clear’ or ‘look out below’ signal from the job market data.” |
Then this summer, from July 10-17, I’m scheduled to take part in the 2016 Money, Metals, & Mining Cruise. Seven days at sea on board the Crystal Serenity. It’s a gorgeous trip from Anchorage to Vancouver, with stops in ports like Sitka, Skagway, and Juneau along the way. The trip features welcome and farewell receptions, dinners hosted by myself and fellow market experts, plus presentations, roundtable discussions, and Q&A sessions.
You’ll get all that and then some. So be sure to call 800-797-9519 if you’re interested in joining me on board. Or you can click here for more details.
Lastly, make sure you check out the latest issue of Safe Money Report. It just went to press yesterday, and contains a wealth of information and new recommendations.
Phew! I think I covered all the bases in these busy times. Now, I’d love to get your views on the latest jobs news.
[Read More – Yet ANOTHER Billionaire Warns About Coming Chaos – Mike Larson]
Do you think the labor market is doing better or worse? Are companies in your area (or your employer) hiring more aggressively? Or are they starting to cut back? What do the latest labor market trends mean for stocks, bonds, and currencies? Let me know in the discussion section here at the website.
|
Meanwhile, in response to earlier columns my colleagues and I wrote, you shared opinions on currencies, stocks, central bank policies, and more.
Reader Mike was pessimistic about the market, saying: “The price-to-earnings ratio of the stock market is overpriced right now. Only a fool would invest in overvalued stocks, and also overvalued real estate, such as New York or San Francisco, just to mention a few areas.”
Reader Badger10 shared his thoughts on both the recent rally and the longer-term outlook, saying: “This was a big strong rally even though the leaders were defensive stocks. I agree with you that this was not good leadership. Market topped out yesterday and should come back down to a more reasonable level. With the amount of debt built up by ZIRP, it is possible a bear market looms ahead.”
And Reader Chuck B. cited investor confidence as a key problem, offering this take: “If 28.7% of Americans expect the stock markets to rise over the next year, that means that 71.3% expect them to fall, or remain even. That doesn’t seem to reflect much confidence by consumers in this country. How many investors will remain active in the markets if they are that pessimistic?”
As for recent central bank action, and its impact on markets, Reader Joe said: “Since when is the U.S. central bank supposed to be concerned about the economy in any other country other than the U.S.? Why is this fraud Janet Yellen basing policy on China?
“The Fed, like socialism, has over a century of failure. Yet it bumbles on, doing everything it can to keep the banks afloat, no matter the damage to the ordinary American. End the Fed!”
Lastly, Reader Myron M. shared the following gloomy outlook (on everything but precious metals): “Given the unprecedented levels of debt on a world scale, it seems to me the fractional reserve banking system is rapidly reaching a point of no return and potential collapse. It is a recipe for perpetual debt that is spiraling out of control and desperately needs to be restructured.
“Consequently, I have been investing in junior gold and silver miners with proven reserves and professional management. I have had numerous doubles in the past year and in the past three months at least seven stocks up 25% or better, which annualized equates to more doubles on the horizon.
“I won’t be surprised to see a 50% stock market meltdown before the end of the year and a consequent doubling or better of precious metal prices. Only gold and silver are honest and reliable money that can’t be printed into existence at the whim of clueless politicians and bureaucrats.”
I appreciate all the comments. And I agree that many of the world’s central bankers are out over their skis, trying an ever-increasing array of less and less effective policies. That’s a key reason why investors are turning to alternative stores of value like gold, which just racked up its best quarterly performance in three decades.
If you have any other comments I didn’t cover, feel free to add them in the discussion section below.
|
We’ve been hearing rumors about oil production agreements every few days for the past couple of months. They always get energy traders excited. But there may be less to any deal than meets the eye.
I say that because Saudi Arabia’s deputy crown prince Mohammed bin Salman told Bloomberg today that his country won’t freeze output unless everyone else does. That includes Iran, which has already said it won’t take part in any agreement. Major Middle East producers are meeting in Doha, Qatar, on April 17 to see if they can work things out. So keep that date on your calendar if you invest in the energy sector.
Buying up trillions worth of government bonds has dramatically reduced liquidity in that market. Now, the European Central Bank’s plan to Hoover up billions of corporate bonds could have a similar impact in that part of the market. At least, that’s the opinion of this columnist at Bloomberg … an opinion I happen to agree with.
The upstart carmaker Tesla (TSLA) has rolled out its first mass-market electric car, the Model 3. The five-seater sedan will carry a price tag of around $35,000, and should have a range of around 215 miles per charge. Customers won’t actually get their hands on pre-ordered cars until late 2017.
Do you think OPEC and non-OPEC producers will be able to come to a real agreement later this month, and will it help support oil prices? What about the ECB’s corporate bond buying plan – will it make things better or worse in the markets? And have you placed your order for a Tesla Model 3 yet … or are you planning to stick with gasoline-powered vehicles for the foreseeable future? Hit up the comment section below and let me know.
Until next time,
Mike Larson
Recommended Articles by Mike Larson:
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.
{ 29 comments }
The new Tesla is just plain fugly. It looks like someone chopped off the back of the model S.
it looks like the central banks have pushed everything but the vix.
It seems to me many of you are too gloomy. I believe the correction is close to being over.
Rather than look at small things, think of the big items. Clearly the major thing of this past week was the speech of Ms. Yellen. In my opinion she reset the goals of the FED. Future interest rate hikes are unlikely while our economy doesn’t need restraint. In addition she put the U.S. in sync with Europe and Japan. Our dollar had been appreciating too fast, hurting trade. Moreover, look at today, the market started down 100 and finished up 100.
The bears clearly lost today. Thx.
Peter Morici has been right a lot. He says it’s nothing but smooth sailing from here on out. Jim
I’ll take the other side of that bet. The world bond market is in big trouble. Look for it to spread to stocks. We should soon turn down there. Could have a small spurt up….but the worldwide debt is a huge drag and trend should soon…if not now….be down sharply.
Just read this stat from Bloomberg: Of all the junk debt held in the USA…..40% did not even trade in the first 2 months of this year.
Or how about this little factoid from Bianco: 46.2% of the non-US world bond market now have negative interest rates.
Finally….the deflationary disease is now moving to corporates. Bloomberg says there are now $16 Billion worth of negative interest bonds…mostly in Europe.
I was by the Tesla showroom on Colorado Boulevard in Pasadena last weekend. I was told by the salesman there about the Tesla 3. The salesman also told me that the batteries are being adapted for use as backups to solar panels, which would be very good as storage of the sunlight-generated electricity is the third leg to the solar stool. As for their up and coming models, as asked the salesman when an SUV or pick-up would be coming out. The salesman told me that the SUV model is on the boards and will debut sometime this summer. Cool Deal! and environmentally responsible pick-up!
The SUV and truck will cost 120K+. And don’t believe the 35K price tag for the Tesla 3. The real number will probably be more like 45K. Tesla will lobby for more taxpayer subsidies and claim that the price is lower.
Are you talking about the SUV or the pick-up?
The batteries are only grid tied and you still have to be connected to the electric companies. Its a step in the right direction, but not there. The problem with only 215 miles for me is that if I drive to the big city it will only get me there and then I’m stuck. I live 25 miles from the grocery store. Hope they have major breakthrough in batteries soon.
For the oil producers to agree on freezing oil production at a level of 1.5 million barrels per day more than current demand is to just guarantee that the price stays low or even drops further. They have all lost their minds just like the people who run world governments. Did someone put something into the worlds water supply or what explains the nutty behavior?
The Saudis are getting the children off the street. Jim
P/E Ratio Limitations
P/E Ratios for stocks used as a timing tool are inadequate, as markets often respond to other factors like investor sentiment or foreign capital flows. The FED can have quite a psychological influence on how much buyers will pay beyond the individual stock or company’s fundamentals.
So, P/E ratios are really of little real time help in making individual investment decisions. Eventually, the pendulum swings and overvalued stock markets go to way undervalued, as in cycles. However, Nobody can accurately predict the duration or timing of these swings. What matters most is what the market is doing today at the individual stock level. Most pundits don’t even know this.
That was the other Chuck, but I agree with him,
I wont be placing an order for the new Tesla. I like my vehicle to go further than 200 miles before I have to stop. As far as Telsa from an investment standpoint, I wonder if anyone asked Elon Musk if they can make any money selling a car for $35k. I think we know the answer.
If he sells more than 200,000 vehicles he loses all his subsidies and tax credits. Jim
And it’s nice to know you can generally find a convenient refill when you need it.
That increase in jobs has lured some of those who had left the job market to give it another try
Something shut me down before I could finish. I meant to say that is a reason for the slight increase in unemployment. Unemployment could go somewhat higher if more of the millions who had given up enter the job market again, since the BLS only acknowledges their existence when they start looking for work again.
Electric cars would be nice but there has to be a place to recharge them, like at a parking/charging station/meter attached maybe to your local utility company, but you have worry about people cutting the cord. Of course you could also attach the parking ticket function to it too. And there is the cost of the infrastructure to go with it and the increased power demand at a time when EPA rules are shutting down power plants. Without some pretty massive investments the electric may not be the wave of the future. A local news broadcast in the SFO bay area showed people camped out at the Tesla dealer ala rock concert ticket sales to sign up for a car they won’t see for close to two years and oh yeah the deposit. I’m waiting for the Elio cars to hit the market, also projected for next year or so. (Elio Motors.com) Supposed to be imported from Louisiana, designed for 84 mpg and two passenger tandem, like the 1947 Messerschmidt.
Locally, you can park your electric car at BWI Airport in special spots with plug ins at the hourly garage. $4/hour, but I think they throw in the juice. Could get expensive if you are gone long, though.
The Elio is a coffin on wheels. Jim
They all are. Have you seen a new Ford F150 truck when it catches fire? Everything burns down to the frame except tailgate.
I am surprised that they aren’t putting a solar panel of 400+ watts to help further the mileage and charge when parked. There are flexable panels that could be put into the roof like a sunroof. It would be easy to do. It would look like a tinted sunroof. Just a thought.
200,000 people each just plopped down $1,000 as down payment on a $35,000 Tesla 3 for delivery in late 2017. It appears 200,001 people (including Musk) at least have faith in the USD maintaining strength until then; or 200,000 could care less what the fine print had to say about Force Majeure. And the stock price went up! Blind faith on everyone’s part in my estimation; or there is a lot more present day orientation out there than I expected.
Good point! If it costs Musk $40,000 to build the car by then, will he deliver for $35.000?
The employment situation report, albeit being a market mover, I believe should not be read on its own. True that jobs may have been added, but it does not tell whether those people are likely to be spending all their hard earned monies at any given time. This beckons to read the employment situation as for instance in tandem with the consumer and business confidence reports to obtain a feel from what the outlook are from those sphere’s as they generally have a feel for where the economy is heading!
Question
After it’s sharp rise, the S&P 500 is showing overbought in several indicators. Will it come down as far, or as quickly as it rose? That remains to be seen, but it is certainly due for at least a correction, which could trigger profit taking and possibly driving it down rather sharply.
Since we are no longer on the gold standard what is the value of our dollar connected to ? How can the USA and other countries really think a fiat system is viable ?