Obama Exciting Endorsement

JOBS and The Compromise.

In the comments section several of you have brought up the Deficit & Jobs and how they relate to the major Tax cut extension compromise that Democrats have soundly rejected.

On the DeficitYou’re right its going to add about $900 billion and those same hypocrite Republicans who agreed to this compromise are going to scream bloody murder about the deficit later.

However JOBS is priority one and almost everyone realizes this. Without it we get nowhere because without jobs there is no income and far less tax revenue. Americans realize this as explained in Nov. 22nd Investors 411 American are far more concerned about jobs and the economy than anything else

Job Multipliers (formulas) are  tools economists use to evaluate how many jobs come form different economic stimulus. Links here (scroll 1/2 way down to tabel 2) & here You will find the lowest job multipliers on these lists are cutting taxes for the wealthy and corporate taxes. Highest job multipliers are areas like infrastructure spending, energy production & food production.

As we all know we cut taxes in 2000 and we know it did NOTHING to stimulate jobs growth because unemployment has nearly doubled since then. Cutting taxes has also led to a bigger deficit.

Here’s my rating of different parts of the Obama Compromise as related to

JOB & ECONOMICS

  • Tax cuts for the Wealthy – Adds to deficit and is a horrible jobs multiplier Grade F
  • Tax cuts for middle class – Adds to the deficit  and is a moderate jobs multiplier  because most of these folks will spend money. Grade C
  • Extending Unemployment benefits - Adds to deficit and is good jobs multiplier because money immediately spent. Grade B+
  • Breaks to corporations – Adds to deficit  at a time when corporate profits are at a nominal all time high. Grade F
  • Cuts estate tax – Adds to deficit and is horrible jobs multiplier Grade F
  • 2% pay role tax cut for those earning less than 107k Adds to deficit but is moderate/good jobs multiplier Grade B-

These grades are, of course highly subjective. I’ve put far more emphasis on job creation than deficit reduction. I did not have the time to put important dollar figures behind each topic. So guesstimating those figures into final grade  The final grade for Obama’s Compromise as primarily a jobs bill is Grade D+

In Obama’s original stimulus package – There was both Political Pork and some excellent energy related and infrastructure programs that multiplied jobs. The biggest part of the Obama Stimulus – a $288 billion tax cut - doesn’t seem to have had any sort of major impact on job creation relative to job multipliers.

Am I wrong? What’s your take?

If you disagree and give it a higher grade –  Remember from 2000 to 2010 the tax cut LOST jobs because we now have so many more unemployed. The Obama Stimulus (whose biggest component was a tax cut) gets points for stabilizing job loss (from -700,000 per month to a +50,000) but did NOT bring us our of our 10% hole.

As Robert H once said in the comment’s section of the blog when asked about smaller/bigger government and cutting/raising taxes  -  “Im for Effective government.”


STOCKS

Investors411 tries to keep it basic.

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow -0.02% down
NASDQ +0.29% down
S&P +0.38% down
Russell 2000 +0.47% -

-

Technicals, Fundamentals & Analysis

Investors411 record – 5 years of beating benchmark S&P 500

World Stocks

Stories about China possibly raising interest rates seem to be having a greater impact on stocks than all the gridlock or wrangling on the tax cut extension. Reality is The Obama Tax cut compromise has been talked about by everyone, but its price impact has been one big yawn for US equities

———–

Chart Pattern for benchmark S&P 500 has formed a classic 8 month long cup and handle trading pattern. We have had a breakout (also NASDQ & Russell 2000) to new highs. This was NOT your typical BIG volume breakout that used to be associated with a major support falling.

As mentioned many times before – US market investors/traders have changed. Mom & Pop investors have left and trading is dominated by the algorithms of Black Box High Frequency Traders. So the old rules governing volume have changed.

————-

Significant Shorter Term Forecasting Indexes

  • The Dollar (USD) [Anything daily price move over +/- 0.50 is significant. Dollar usually moves inversely to stocks] The dollar has been basically flat for last 2 days. Yesterday +0.09% = Neutral
  • The Baltic Dry Index (BDI) [measures cost of world trade. Also proxy for China, emerging markets,&  exporting countries]Rate fell -1.54% yesterday. Price is at bottom of consolidation level and a breakdown is threatened. But, for now, still = Neutral
  • McClellan Index – (MO) [The rough guideline is over +60 = overbought market = sell positions or short stocks, & -60 = oversold market = buy stocks.] rose a bit to -3.15 Plenty of room for action up or down. = Neutral

Reading The Tea Leaves -

  • 10 Year T Bill setteled down yesterday and that’s bullish for stocks.
  • Major Indexes are pretty far above 50 DMA’s and this shows they are close to overbought. That’s bearish
  • MO sending a conflicting signal saying there is pleant of room for major indexes to move up. That’s neutral

Bullish Outlook for rest of year – Why

Volume gets historically light starting next week and into the new year. Traders and investors go on holiday break.  This leaves the Fed buying bonds from the its 21 primary dealers (shadow banks) and those dealers investment houses (wink wink) investing that money back into stocks. It also means the BB/HFT are more dominant.

What happened yesterday was an example. Lighter volume a big Fed print and dump and about 2:30 markets take the excess supply of money and this  ultimately juices stocks. So there is a good probability that we continue to have a light volume slow melt up. The light volume will magnify the amount of money that the Fed and member banks are investing.

Also, December is historically either the best or second best month of the year. Money managers will want to show their clients that they have the winning stocks in their portfolio  at the end of the year. So there is some rebalancing. Everyone knows this happens and front runs it.

Of course, dramatic outside event could shatter this. If China does raise interest rates too cool off growth this melt up will get tempered. But on the whole still cautiously bullish for the above reason.

Positions

The  Positions Section link to latest & former buys and sells  - These are positions I actually own

(I do manage 6 accounts that have other positions).

Current ETF Positions. These are, hopefully,  longer term positions

When trades are actually made in ETF’s they are listed in comments section of blog (almost always near open or 1/2 hour before close)

  • EEM - (Emerging Markets ETF)
  • #1UWM – small cap stocks – 1/2 position
  • #2 UWM -

The only reason I did NOT add to leveraged ETF positions, when markets dipped yesterday was that at the time of the dip I was occupied on something else. Will try again – Probably UWM or ROM (2X techs. A big 100 pt. Dow dip perhaps TYH (3x techs)

Look for Paul R’s always enlightening remarks on stocks and sectors in the comments section of the blog. See POSITION section of blog for lists of potential stocks & ETF’s including ”YOUR Stock List.” -

Longer Term Outlook - CAUTIOUSLY BULLISH

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

  • Share/Save/Bookmark