Note  - Last Update for the week.

Where are the New Jobs?

Dorothy Lange’s famous photo –  Migrant Mother from Wikipedia

Right now – job cuts are declining in the USA - down @700k in January to @200+k last month. Major reasons why -

  • China India and other emerging markets keep growing and stimulus packages around the world stimulate their growth. Therefore US global companies  don’t need to lay off more workers.
  • The US government stimulus package creates jobs and cuts taxes. In a year or two the Obama or US stimulus package will run it course.
  • The Fed has injected massive amounts of capital into the system propping up the shadow financial system and keeping it from failing-thus saving jobs.
  • The automotive sector has been bailed out preventing a total collapse of jobs in the sector.

What happens when the stimulus, and cash infusions run their course. Where will the new jobs come from?

Wall Street companies are playing cut throat with each other trying to get into Emerging Markets (China #1 on the list). Labor costs are cheaper there and they have growing GDP’s. (some of this is phony accounting, but overall they far outstrip the USA in growth) So Wall Street companies will as they have in the past hire lower cost and now better educated workers from abroad. Now there is even more incentive to hire abroad because of their growing markets. It’s even cheaper for US companies to hire European workers because they don’t have to worry about health care costs.

Bottom Line –  Jobs has historically been a lagging indicator after a recession because of globalization. It sure looks like job creation is going to be worse this time than after other recessions. What’s going to happen in the long term after all the stimulus, tax cuts, money printing etc. becomes no longer sustainable?

One major  Obama/Tom Friedman’s solution is to turn alternative energy into the next tech explosion (like the internet). But, the investment, so far is way too limited and others from Germany to China are already leading the charge in this area.

Your Comments

Check out “Doggies Mom” who has a LINK to an editorial on health care by Rose Ann DeMoro and Michael Moore .

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index Percentage % Volume
Dow -0.48% up
NASDQ -0.31% up
S&P500 -0.22% up
Russell2000 -0.45% -

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

  • Brown = repeat statements
  • Green = usually bullish statements
  • Red = Usually bearish statements

Technicals and Fundamentals

Volume rose a bit as stocks retreated. Volume was below average. No real confirmation or follow through of Monday’s rally.  Probably means all eyes are on the Jobless claims at the end of the week.

There is some clear change in overall feeling. The BDI has fallen for 4 months – although the rate of decline has slowed. This indicates China, who was buying all kinds of raw materials because they were cheap has stopped.  China was a major growth factor in leading us out of the recession. This also indicates that the US did not buy as many holiday items from abroad. Potential for a slow holiday season.

The up side fundamental is the stock market. Because it has had a phenomenal run from the lows investors may feel like spending some of those gains.

Bottom Line – Although we could move higher and Dow 10,000 is drawing investors like a magnet, there is reason for CAUTION. If we get a reasonable jobs number – under 200,000 lost jobs in September you may see a short rally.  Its starting to feel like traders will sell the rally.  Still holding on to the Long term CAUTIOUSLY BULLISH outlook

Big news for week is the jobs number for the month of Sept. coming out Friday.


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Significant forecasting tools/Indexes for stock markets

(Besides #1 Volume & #2 Reaction to News)

BDI The Baltic Dry Index measures the flow of goods by price (world trade) .

2388 is support now resistance level/number to watch After a short two day rally of +29 points the BDI fell yesterday -7 and closed at 2185. These are very small moves, but in the right direction.

The BDI is almost 50% off its high (early June) Before that it gained almost over 630% from its all time low of 663 in Dec. of 2008 (April 2009 high of 4291 ) A 50% retracement from highs is a major support level. Therefore some stabilization is understandable.

What this means World trade is in trouble – lots of ships are sitting in ports empty.  To some degree, China has stopped buying raw materials and/or the US consumer is not buying as rapidly as earlier in the year. Braking a support level is significant, but 2192 (current level) is still a long way from the Dec. 2008 663 low. = Storm clouds gathering

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$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.

Mantra Dollar up = US stocks down & Dollar down = US stocks up

The dollar rose +0.17% yesterday to $77.12 . Its chart shows it has clearly formed a short term higher high over the last two weeks. Higher dollar usually leads to lower stock prices.

Last year’s low was around $71, so there is a long way to go before the next major support level.

Positions

The  Positions Section (top of blog) to see all the latest buys and sells

revised to reflect recent trades last weekend

Long Term Outlook = CAUTIOUSLY BULLISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

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