Every week in the Weekend Investor Newsletter, I provide an up-to-the-minute “State of the Markets” address to help investors keep the bigger perspective in mind. Especially with all the volatility we see on a daily basis in the stock market, we benefit from perspective as we seek to prepare for the markets’ direction in the coming weeks and months. For the this the last week of October and the first week of November, I’m going to share with you those articles. I’ll include the dates so you can get a feel for the value of such information at the moment. Let’s begin by taking a look at how September opened… after a volatile Summer.

From Bad to Worse

Every so often… about once every three years, you get a week like this past week. Although the markets showed early signs of strength, coming off a week many viewed as a bottom, the air quickly deflated any sense of optimism, leaving investors feeling deflated by Friday afternoon.  Although I usually remain fairly even keeled, by the end of this week I was exhausted.

Volatility remains high… making it extremely difficult for investors to profit and the markets continue to be rocked by news.  This week’s big story was the employment numbers, released Thursday.  Here’s some of the “highlights”:

• August Nonfarm Payroll figures were unchanged.  Unfortunately, economists were expecting the creation of 70,000 jobs.
• Even more disconcerting was the revisions of the June and July employment figures.  June was revised down an additional 26,000 jobs… July, an additional 32,000 jobs.
• Some suggest if you take out the Birth/Death model, the Verizon Strike, and the Minnesota Government Job gains, the real stats would be a loss of 60,000 jobs in August.
• Hourly work hours fell… to 34.2 and average hourly earnings were down .1% from an expected increase of .2% (a .3% difference – significant!)

Yet, not everyone is a pessimist… Navellier, for example, wrote an article highlighting all the positives he’s seen in recent numbers including durable goods up 4% in July, retail sales up, and jobless claims falling.

Frankly, I don’t share his optimism. Longer term subscribers will know how important employment figures are to my evaluation of the overall economic picture.  Employment numbers, a theme I keep harping on, is the true sign of recovery.  Of particular importance is private sector job creation.

If you see a silver lining in these dark economic clouds, look again…

It’s most likely lightening!

Of course, there are always exceptions to the rule… such as North Dakota, where unemployment sits at a low 3% due to the oil boom of the Bakken.  But don’t be fooled… this is the exception, not the rule.

~ by Doctor Stock