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Unemployment Hits 9.8%, America’s Love Affair With Stocks May be Over…

Stock-Markets / Financial Markets 2010 Dec 04, 2010 - 05:38 AM GMT

By: Anthony_Cherniawski


Best Financial Markets Analysis ArticleThe unemployment rate edged up to 9.8 percent in November, and nonfarm payroll employment was little changed (+39,000), the U.S. Bureau of Labor Statistics reported today. Temporary help services and health care continued to add jobs over the month, while employment fell in retail trade. Employment in most major industries changed little in November.

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force remained at 17% in November.

Payrolls Huge Miss: +39K Compared To Consensus Of 150K

(ZeroHedge) Here are a few observations about the payroll figures. Virtually every expectation was missed in this payroll report. Hourly wages remained flat. Manufacturing plunged 13,000 vs. expectations of a 5,000 gain. There are a total of 15.1 million Americans who are unemployed, of which 6.3 million remain unemployed 6 months or longer.

Economy Needs To Create 235K Jobs A Month To Return To Pre-Depression Levels

(ZeroHedge) …this is the number of jobs per month that need to be created between December 2010 and November 2016, or the end of Obama's now improbable second term, for jobs to recover their losses when taking into account the natural growth of the labor force of 90,000 people per month.

America’s love affair with stocks may be over…

-- The divorce is not final, but recriminations have already begun. The Investment Company Institute reported the 30th sequential outflow from domestic equity mutual funds. That brings the total YTD mutual fund redemptions in excess of $91billion. Normally that amount of outflow would bring the market to new lows, but the propaganda, manipulation and intervention by the Fed that is propping the house of cards has left a hollowed-out edifice instead of true value. A crisis is about to begin.

The Long Bond appears to be building a base.

--Treasuries made a quick, sharp reversal higher Friday, sending yields on the 10-year note back below 3%, after a much lower-than-expected rise in nonfarm payrolls cooled expectations that the U.S. recovery was picking up steam. The expectation that the economy was recovering weighed heavily on bond prices until this morning’s employment report. The long bond may be viewed as a haven for investors in an economic downturn.

Majority of traders still positive about gold.

--Gold futures topped $1,400 an ounce Friday after a disappointing jobs report pushed investors back to the perceived safety of the metal and a weaker dollar provided extra appeal. Unfortunately, the flight to safety and the inflation trade are diametrically opposed to one another. This may cause some grief among gold investors.

Japan’s Stocks look to the U.S. for strength.

-- Japanese stocks rose, sending the Nikkei 225 Stock Average to a fifth straight weekly gain, as U.S. housing and retail data bolstered confidence in a global economic recovery.

The Nikkei 225 rose 0.1 percent to 10,178.32 at 3 p.m. in Tokyo, the highest close since June 21. The broader Topix index advanced 0.2 percent to 879.22, as about five stocks gained for every three that fell. This week, the gauges climbed 1.4 percent.

China to adopt “prudent” fiscal policies.

-- China will shift to a “prudent” monetary policy next year as the government seeks to rein in liquidity, combat accelerating inflation and limit the risk of asset bubbles.

Officials “will adopt proactive fiscal policies and prudent monetary policies,” the state-run Xinhua News Agency said today after a meeting of the ruling Communist Party’s Politburo. The government had described the monetary stance as “moderately loose” since late 2008.

Bernanke defends QE2.

-- The dollar dropped to a three-week low versus the yen as U.S. payrolls added less than one-third as many jobs as forecast last month, keeping unemployment near a 26-year high and spurring speculation the recovery is faltering.

The greenback fell against all of its most-traded counterparts except the Mexican peso and Canadian dollar as the jobless rate unexpectedly rose to 9.8 percent, underscoring the Federal Reserve’s decision last month to pump more money into the economy to spur employment.

The Rise and Fall of the Home-Ownership Myth

-- The idea that "a man's house is his castle" is attributed to American Revolutionary James Otis from 1761, and his idea was that government should never be permitted to breach its walls. It is a good thought, in context, one that sums up a dogged attachment to the right of private property. In the 20th century, however, government got behind the idea that every citizen should be provided a castle of his or her own.

Easing Gasoline Prices Not Yet Evident Across the Country.

--The Energy Information Agency weekly report states, “The U.S. average retail price for a gallon of gasoline decreased 2 cents from last week to $2.86 per gallon, $0.23 per gallon higher than last year at this time. The decline was sharpest in the Midwest, where prices were almost four cents lower than last week, followed by the Gulf Coast where prices were down by almost three cents.”

Natural Gas Prices Rise on Higher Demand.

-- The U.S. Energy Information Administration reports, “As a strong cold-weather mass entered much of the lower 48 States this report week (November 24-December 1), natural gas demand for space heating increased significantly…This higher demand led to widespread increases in prices that generally ranged between 5 and 15 percent east of the Mississippi River, but were considerably less in the West.”

Rosie's Must Read On A Hope-Based Rally Now, Followed By Shock Therapy Later

(ZeroHedge) The recovery is obviously still so fragile that the Fed felt the need to expand its balance sheet by an additional 25% and policymakers in Washington fear that the economy can slip back into recession if the Bush tax cuts and the 99-week emergency jobless benefit plan are not extended. When you get through the WSJ’s op-ed piece today (The Fed’s Bailout Files) it is readily apparent as to how the financial system can be rigged and manipulated by government officials, elected and non-elected alike. We don’t claim to be monuments of justice and perhaps Bernanke et al saved the world from imminent collapse in early 2009, but since when is a 14x P/E multiple “cheap” or even “fair value” for a period in economic and financial history in which capitalism went on a prolonged sabbatical? The Reagan Revolution this is not (though perhaps gets revived in 2012).

Was JPM's October 2008 Redemption From Madoff On Concerns Of Fraud The Reason For The Ponzi's Implosion?

(ZeroHedge) Earlier today, Irving Picard, trustee of the Madoff liquidation trust, filed a lawsuit against JPM, accusing the bank of enabling massive fraud and seeking over $6 billion in fees and damages from Jamie Dimon's bank. As per the press release (full copy below), the reason for the lawsuit is that "JPMC admitted in the months before Madoff’s arrest that BLMIS’s returns were too good – especially in down markets – to be believable, but for years they pretended that was not the case,” while on the banking side, the complaint charges, JPMC should have been more vigilant in seeing illegal cash flows.

Deaf To History’s Rhyme: Why President Obama Is Failing

(Thomas Palley) The great American novelist Mark Twain observed “history does not repeat itself but it rhymes.” Today the rhyme is with the 1930s, and if you don’t hear it read FDR’s great Madison Square Garden speech of October 1936:

“For twelve years this nation was afflicted with hear-nothing, see-nothing, do-nothing government. The nation looked to government but the government looked away. Nine mocking years with the golden calf and three long years with the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that government is best which is most indifferent.”

Double Dip In Housing Largely Caused By Failure to Prosecute Mortgage Fraud

(ZeroHedge) There's a double-dip in housing prices (and see this).

As CNN points out:

U.S. home prices fell 2% in the third quarter after having gained steadily since early 2009.

The S&P Case-Shiller Home Price Index has recorded gains in four of the previous five quarters, including a 4.7% jump between April and June 2010. That leaves national home prices down 1.5% year over year and off 2% compared to the second quarter, according to the Index, which was released Tuesday.

Market Celebrates Just Announced Record Foodstamp Usage By Closing At 2010 Highs

(ZeroHedge) For those seeking a perfect explanation of what is happening in United Banana States of America right now, then look no further: the just released September Supplemental Nutrition Assistance program data is out and we are happy to report that the number of poor Americans has never been higher - SNAP recipients just hit a fresh all time high of 42.9 million. Naturally, the market celebrates the record number of poor Americans by closing at 2010 highs. No long-winded, somnolent essays, no rants, just observations. These two facts explain everything that is happening in this unrecognizable banana republic. Now that is a five year banana plan you can believe in.

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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