It’s time to sit back, relax and enjoy a little joe …
And away we go …
Credits and Debits
Credit: After diving 250 points at the opening bell on Friday — thanks to a very ugly September jobs report — the Dow shook off the news and abruptly reversed course. It then began a steady — if not inconceivable — 460-point climb to finish the day in the green. Go figure.
Credit: It’s days like these that give added credence to Chris Powell’s claim that, “There are no markets anymore, just interventions.” That is, until there aren’t — and that day is coming.
Debit: Apparently, this week’s news that there are now almost 95 million Americans not in the labor force isn’t a big deal to today’s stock market “investors.” Or the Plunge Protection Team.
Debit: They also don’t seem too concerned that, for the first time since 2009, all six Fed regional activity surveys indicate a contracting economy. Better late than never, I guess.
Debit: The reality is, anyone taking the time to delve a little deeper into the the September jobs report would see that it was a complete disaster. Well … unless you live on Wall Street.
Credit: Yes, at just 5.1%, the unemployment rate ended September unchanged from the month before. But that number has so many arcane caveats attached to it that the figure has become utterly meaningless — not to mention outright misleading.
Debit: In fact, the last time the labor participation rate was this low was 38 years ago. That’s right: 1977. You know what that means: it’s time to break out the disco ball.
Debit: It gets worse: Remember the rosy August employment figures? After they were released last month, Wall St. was jubilant and stock indices jumped higher. Well … the August data was just revised downward 21%. Oops.
Debit: Then again, if you’re an immigrant, the US economy ain’t all bad: 218,000 foreign-born workers managed to find employment during the third quarter. It’s too bad a million fewer native-born Americans are working today than three months ago.
Debit: By the way, 78% of the paltry 118,000 private sector jobs created last month were low-wage positions. And while the US economy added 21,000 waiters and bartenders in September, it also lost 9,000 manufacturing jobs. Forward!
Debit: In case you’re wondering, according to Zero Hedge, since 2008 the US economy has added 1.5 million new waiters and bartenders to the work force — and lost 1.4 million manufacturing jobs. Does anybody else see a problem here?
Credit: Of course, with the US employment situation so dire, it’s really no wonder that 67% of recent university grads think college is a ripoff. You can bet most grads with a science, technology, engineering or math degree have the minority opinion.
By the Numbers
Lest you need more confirmation that the third quarter of 2015 was not kind to the financial markets, here is a quick look at some of the carnage:
– 7.6% The Dow’s three-month return on investment.
– 7.0% The S&P 500’s return during the third quarter.
– 7.6% The Nasdaq’s third quarter return.
10 Consecutive quarters that the Nasdaq had finished in the black prior to this one.
– 17.8% Third quarter performance of the Nasdaq Biotechnology ETF.
2002 Last year that the Nasdaq Bio ETF had a quarter as bad as its most recent one.
– 4.8% Change in the price of gold during the third quarter.
5 Number of consecutive declining quarters for gold. The last time that happened was 1997.
– 24.2% Decline in the price of crude oil over the past three months.
Source: CNBC
Last Week’s Poll Results
How much money do you need to pay all of your bills each month?
- $1000 – $2500 (37%)
- $2501 – $5000 (35%)
- Less than $1000 (20%)
- More than $5000 (8%)
More than 700 Len Penzo dot Com readers responded to last week’s question and while roughly 7 of 10 respondents said they need between $1000 and $5000 to pay all of their bills each month, the real story is how many fell outside those boundaries. Roughly 2 in 10 lucky people spend less than $1000 on their monthly bills, while 8% are stuck paying more than $5000 every month. Ouch!
The Question of the Week
[poll id="82"]
Insider Notes: My Summer 2015 Electric Bill with Solar Panels
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Other Useless News
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Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com
After reading my article on lousy customer rewards programs, Bridget shared her experience:
I got a Keurig coffee maker with my Coke points and it was well worth it.
Correct me if I’m wrong, Bridget, but I’m bettin’ sleep isn’t too high on your priority list.
I’m Len Penzo and I approved this message.
Photo Credit: brendan-c
Len, you left out a huge credit this week. We’re obviously going to need those bartenders.
LOL! Good one, Special Ed. Why didn’t I think of that???? 🙂
Len,
Cmon, you know those 95 million folks not in the workforce are factored into that 5% unemployment!
Honestly after watching that horrible news on Friday about the jobs report and the Dow opening down 250 points, I thought the Dow was headed for negative 600-700. Never in my life will I figure how they finished over 200 to the positive. What or how does the Fed manipulate the stock market. Is I do understand now how they manipulate gold and silver now after looking into it. I have heard the Fed is still pumping new money into the system, but it’s not by QE. Can you explain?
Thanks,
Fellow Stacker Jared
P.S. Watch Russia and China, I think they are the ones that will bring this House of Cards Down.
Since it is done behind the scenes, nobody knows for sure, Jared. But the two most plausible explanation are that the PPT:
1) directly buys stock market index futures contracts using government funds (which is illegal), through the “too-big-to-fail” banks (or Fed or Treasury trading desks) — or —
2) pressures the same big banks to buy those stock index futures contract directly themselves
Len,
If they are doing what you stated above couldn’t they just do that infinitely? At least until Russia or China brings the Dollar down however long that might take.
Jared
It’s easy to manipulate small markets like gold and, especially, silver. But the stock markets are too big; when a preponderance of investors decide to sell en masse, then there is nothing the PPT will be able to do to stop it. This is even more true for the bond market, which dwarfs the stock market.
Len are you looking into the crystal ball again?
By the Numbers
Lest you need more confirmation that the third quarter of 2016 was not kind to the financial markets, here is a quick look at some of the carnage:
It’s still 2015 isn’t it? 🙂
Wow … good catch, Brian! Looks like I need to fire the blog’s editor.
I think a lot of the swings that happen now are traders pushing things down to force margin calls. Think how many people who trade on margin probably hit some limits and were forced to sell on the morning downswing, and watched as someone else enjoyed the gains on the shares that they were forced to sell.
This market is completely rigged, MB. On Monday the Dow finished up another 340 points on pitifully low volume despite a lack of any positive economic news — which means that, since last Friday, the Dow has climbed more than 500 points on the following horrific economic data:
1) the worst jobs report in a long long time
2) News from the Fed showing that the US economy is contracting in all six economic survey regions
We don’t have markets anymore — it’s just a casino, and the “games” are rigged. Forget market fundamentals; the only way to win is not to play.
Len,
What is your take on Bitgold, I see where people are signing up like gangbusters? I feel that the old adage of only commiting 10% of your money to metals is outdated by 20 years. I feel 50% is where it should be now. What’s your take?
Jared
Bitgold is not my cup of tea. As for the percentage of your portfolio that should be committed to physical gold and/or silver: I say as much as you’re comfortable holding. It is only logical that those who believe the current monetary system is mathematically doomed to failure within the next several years should have an allocation closer to 100% than 0%. Likewise, those who think the international monetary system is sound should hold a number much closer to 0% than 100%.