Investors 411 Blog

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

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

An Outsider Looking In?



California Nurses Association photo

Rose Ann Demoro has to go outside the USA to be heard  on the health care issue in the USA. From the Ottawa Citizen (Canada) her editorial LINK or another editorial in the London Time s LINK

She finds the distortion – about death panels, the Canadian system, & phony threats to medicare changes "incomprehensible." She faults Obama & Democrats for not pursuing their election mandate. Obama "gambled" that if he compromised he could bring some Republicans along and "effectively gutted" his strongest allies those passionate about caring for others.

Many on the left are starting to look at health care reform as more another corporate give away than reform.

Her conclusion

" Among major nations, only in the U.S. is health care not a fundamental right, but bartered for profit by a maze of health-care corporations. The result is that the U.S. continues to fall far behind other industrial nations in a variety of measurements, from access to care to equality in treatment, and even in the much discussed issue of waiting times for medical care.

While the U.S. spends twice as much as every other nation on per capita health care, there remain more than 45 million Americans with no health coverage and tens of millions more with insurance who are routinely denied medical care because their insurer doesn’t want to pay for it.

Medical bills account for 62 per cent of personal bankruptcies. Half of all Americans skip doctor visits or immunizations for their children because of high out-of-pocket costs, troubling news indeed with the U.S. already leading the globe in swine flu infections and deaths.

The nation’s registered nurses and many doctors continue to press for real change, a national or single-payer system that would look familiar to Canadians and the rest of the industrial world. It is still possible to achieve stronger reform, but time is running out.

Rose Ann DeMor o is executive director of the 86,000-member California Nurses Association/National Nurses Organizing Committee, the largest U.S. union of nurses.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Index	Percentage %	Volume
Dow	+0.04%	down
NASDQ	+0.01%	up
S&P500	+0.10%	down
Russell2000	+0.14%	-

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

This is a market that is overbought and ready to reverse itself. Again we had a some positive fundmentals (signs of economic recovery) according to CNBC (financial channel). But a rise in the dollar probably contributed to holding stocks back.

For the last 3 days the charts of the major indexes have opened and closed near the same levels. This usually indicates at least a short term reversal or trend .  Because the volume is low it is not confirming the move. However, if you look at volume cumulatively (3 days) it adds up.  So perhaps  small reversal is in the works.

The dollar, right now seems to be key factor in which direction markets move.

Jobless claims, although a lagging indicator, has become important to short term stock prices.

Best read of tea Leaves – This is all the calm before the September storm when everyone gets back from vacation and we get more employment data. If you’re a long term bull a flat market right now is good news because anything that goes up too far to fast usually gets spanked.

Common thought among technical analysts is the markets have risen too far too fast and are due for a correction.

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S ignificant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods by price (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  The BDI rose +39 yesterday. For right now it looks like the major technical support level is holding. Unfortunately, we have created a lower low that confirms both the mid term trend . The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. @ 2298 is a major area of support and the BDI has fallen since early June from 4291 to 2468.  This is just 119 points away from a major support level.

In a nut shell the BDI is

• short term - Bearish pattern
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Bottom Line – Mid term trend is not good for world markets, especially countries that rely on exports. This is why countries that rely on exports are NOT now doing as well as the USA .

While this index does not have as immediate impact on stocks, as the Dollar does, it is very significant to long term worldwide economics.

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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.

The dollar was rose +0.49 % yesterday. The Dollar is in a range between $79.5 and $77.5 . A breakout to either side will seriously impact stocks. Dollar closed at $78.61. Its  major support level is @$77.5 & it has 2 major resistance levels – a falling 50 day moving ave. at 79.19 and the August highs of @ $79.5.  If it breaks down through support stocks should rise, if it breaks up through resistance stocks should fall.

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

This is the index to watch because its impact is immediate.

Positions

The whole Positions Section has been revised (Click on "Positions" at top of blog). Check it out

EWY (S. Korea) was bought at $39.9 and sold at $42.4 for a 6+ gain

All our other outstanding positions that have been held over a month FXI, EWZ, GLD , (gold)  are doing well – especially China & Brazil.

Our new positions in XFL (financials) and SPX (S&P 500) are up a smidge.

Waiting for a pullback to add to positions.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!