Daily Investment Interpretations

November 5, 2010

2010-11-5 (Friday Night):  The markets spent most of the day in the red, and then came back up in the last 20 minutes of trading. The NASDAQ Composite added 1.64 points (0.06%) to end the day  at 2,578.98  The Dow added 9.24 points (0.08%) to close at 11,444.08, and the S&P 500 rose 4.79 points (0.39%) to end at 1,225.85. Oil rose to $87.11 a barrel, and Gold hit a new high of $1,394 on expectations of a falling dollar. The VIX fell 0.26 to 18.26.  
    Last Wednesday, I wrote, "Also, the unemployment rate has edged up to 9.7% from 9.6% as job creation continues to lag job creation requirements." I'm sorry but that was wrong. I read today that the jobless rate remains at 9.6%.
    Payrolls grow by 151,000 
 
    This chart tells the story.
    Jobs numbers don't work  "Finally, the economy is starting to deliver some good news. Not great news, but good. After struggling through the summer, the labor market is strengthening again. Payrolls rose by 151,000 in October, the Labor Department reported, beating the economists’ predictions handily. What’s more, the job losses in August and September weren’t as deep as previously reported. Read our full story on job growth in October. As welcome as this news is, it’s not enough. The population is still growing faster than the number of jobs. The unemployment rate was steady at 9.6% in October only because the labor pool shrank by more than a quarter million people. The participation rate — the percentage of adults who are working or looking for work — fell to 64.5%, the lowest in 26 years. The number of people who are too discouraged about their job prospects to even look rose to the highest on record. All in all, the payrolls report was encouraging news, especially for those who got one of those 151,000 jobs. But this economy and this nation are still struggling."        
    Gault: News puts to rest double-dip fears (video)  
    No irrational exuberance — yet  Mark Hulbert notes that investor confidence is at a low level.
    The era of broken government  "Commentary: Chances of a Congressional train wreck are growing." Rex Nutting notes that it may not be possible to get necessary legislation passed between now and the end of the year.
     "Remember, in a lame-duck session, it’s the old Congress that meets, not the lawmakers who were elected Tuesday. According to the Constitution, the new gang takes over Jan. 3. That means the Democrats who still control the House will want to do everything they can before they turn into pumpkins on Jan. 3. But the Republicans will want to delay everything they can until they are running the place. It’s classic prisoner’s dilemma. Both sides would be better off cooperating, but each has strong political incentives not to. Tuesday’s election made the parties even more polarized ideologically. Each side thinks that if “they” win, “we” lose."
    A most-important observation is that last summer's slowdown and stock market subsidence was apparently a normal correction rather than a pointer to a double-dip recession.  
    Investors catch Wall Street’s big wave  This article notes how investors are rushing into stock investments.
    My investment advisory service suggests that a short-term pullback of some sort could happen at any time now.