This Week in Barrons – 09-07-09:
Sadly – as I pen this shortened letter on Labor day – I find LABOR is the one element that is missing from the American landscape.
- Friday’s Jobs Report said that only 216K people lost their jobs in August
- Friday’s Jobs Report said "unemployment rate" has climbed to 9.7%.
- The DAY BEFORE - 576,000 people signed for first time unemployment benefits.
- CURRENTLY 6.25 MILLION people are getting unemployment benefits weekly
- According to the BLS (Bureau of Labor Statistics) the ‘teenage’ unemployment rate is at 25.5%, its highest level since the BLS began keeping track of such data in 1948
- The U-6 (the total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons) is 16.8% (according to the BLS)
Yet the market is happy because we ONLY lost 216k jobs – down from 700k+ jobs a couple months ago. But math skills are not our country’s forte any more. Currently:
- 78% of adults can NOT explain how to compute the interest paid on a loan.
- 71% of adults can NOT calculate miles per gallon on a trip.
- And 58% of adults can NOT calculate a 10% tip for a lunch bill.
My point is that we are living the "end game" of 45 years of ‘dumbing down’ the population – in order that the Bankers can actually run the show. The issue now is that the Bankers are losing control of the very ‘mess’ that they’ve created:
- Bankruptcy filings by U.S. consumers rose 24 percent in August compared with a year earlier and could reach 1.4 million this year
- WASHINGTON (Reuters) - More than 35 million Americans received food stamps in June, up 22 percent from June 2008 and a new record as the country continued to grapple with the worst recession since the Great Depression of the 1930s
- The second-quarter commercial mortgage default rate more than doubled from a year ago.
- Societe Generale strategist Albert Edwards warns stock markets, intoxicated by the mild recovery, are missing the big picture: "Firm evidence is emerging that the global economy is sliding towards a full-blown deflationary episode once this recovery falters..."
- CEO compensation at 20 banks that received emergency aid was 37% HIGHER than the average of CEOs at S&P 500 companies. In short, pay packages at banks "remain at levels completely disconnected from any real underlying value that executives may offer”
So, on this Labor Day - buy gold on any dip, accumulate silver, and keep your expenses down.
September is historically the worst month of the year for the stock market. Over the past years (although everyone instantly things of October as being the "crash month") very few realized it was actually September that had the worst returns.
On the other hand – if the market's true "job" is to extract money from as many people as possible, is it just going to roll over and let everyone that went short, or pulled out get rewarded? It is possible, that a much better scenario is for this market to actually move higher in September, and then as everyone went from being short, to being fully long again, THEN roll over.
How long can we go up? If I'm right, I would think that they would need to get the bulk of the lifting done before earnings start coming out in Late Sept or early October. That way they could use poor earnings as the excuse for why the market is plunging. So it's my guess that the market holds up and even moves higher over the short term. Hang in there, as I said a week ago, the next few weeks could be the most interesting of the whole year!
- We sold some of our GDX (a basket of gold mining stocks) at a very handsome profit
- We sold our NGD (a gold miner) for 27% profit
- we’re still holding MOO (agricultural business ETF)
- we’re still holding IPI (a potash hold – again in the agricultural theme)
- If you can hold your finger on the ‘sell trigger’ – there’s ‘daily’ money to be made in the volatility associated with Citi (C ), Fannie Mae (FNM), Freddie (FRE), and AIG (AIG) – but remember the ‘sell’ button.
- Also look at ATPG. A while ago we mentioned that it was looking good on a cross over 10 and it did that in grand fashion. Friday it challenged 12 and wiggled through. I like idea of it being a natural gas company, because Natural Gas has been beaten to death and at "some point" it's going to move up. Granted it probably won't be until October, but I think being a bit early isn't a horrible idea. It crossed 12, and then roared higher. If you like the idea and the chart, I think it's safe up to about 12.30 as a buy in. Natural Gas itself could easily fall another 50 cents before it firms. Let's call ATPG a longer term hold, and we'll give it a fairly wide birth before our stop-out - ATPG at 12.08 (stop at 10.80)
Remember the Blog http://rfcfinancialnews.blogspot.com/
Until next week – be safe.