Financial Market Update
StrategicPoint of View®
March 8, 2010
Welcome to the StrategicPoint of View -- a market and economic overview of what occurred last week, what's up for this week, and our commentary on the economy and current market activity in general for “Making Money” listeners.
LAST WEEK
Personal income rose modestly, spending improved, same store sales jumped, construction spending faltered, productivity was adjusted higher, factory orders came in better than expected as did jobless claims, consumers borrowed more and jobs’ number – due to masking by snow storms – was a bit better than anticipated. Overall, it was a positive week.
S&P 500: 1139 (up 3.08% for the week and up 2.15% on the year)
Dow: 10,566 (up 2.3% for the week and up 1.32% on the year)
NASDAQ: 2326 (up3.93% for the week and up 2.51% on the year)
10-year: 3.68% (from 3.63% last week)
Crude Oil (April): $81.18 (from $79.45 last week)
Gold (April): $1135 (from $1,097 last week)
USD/Euro: $1.3623 (from $1.3625 last week)
THIS WEEK
For the week ahead, economic news will be thin - a few reports on retail sales, jobless claims and consumer sentiment will be all traders will be able to cling to. Of note: Tuesday, March 9th will mark the anniversary of the beginning of last year’s torrid rally.
COMMENTARY
The weather-related noise was deafening - leading up to Friday’s jobs number. Fortunately, the 2009 adage “Less Bad is Better” still applies.
The Labor Department reported Friday that February job losses totaled 36,000. Although no job loss number is a good number, the 36,000 was substantially less than expected. In addition, the unemployment rate held steady at 9.7%. The markets saw the data as a positive, sending indices up three percent on the week.
Drilling down into the employment numbers, there were a couple of positive signs:
• Hiring of temporary workers increased this past month. Although a number of these temps were tied to census jobs, temporary workers are often the first sector to signal improvement in the labor force
• Hourly wages crept up – from $18.90 to $18.93 an hour. Wages have been particularly sluggish over the last decade. Keeping up with inflation (and then some) will be important for consumer confidence
• And for the second consecutive month, both manufacturing and service jobs increased. Caveat: manufacturing only added 1,000 jobs while services tacked on 42,000. The best place to find work is still in education and health services
On the downside:
• Long term unemployment remains sticky – 50% of those without jobs have been unemployed for over 6 months.
• The U-6 number rose to 16.8% from 16.5%. U-6 is a gauge of labor underutilization and counts the marginally unemployed as well as the overtly unemployed. The U-6 figures added to the 9.7% unemployment rate by counting individuals who weren’t looking for work (but want a job) and those working part-time but desirous of full-time employment. The assumption is that these marginally attached workers will need jobs along with those who are actively looking for work.
All of this adds up to our belief that short term, we could see a pick-up in employment. However, it may take many, many years to help those who lost their jobs in the recent economic downturn. The monthly non-farm payroll numbers will be a persistent and painful reminder that any recovery is uneven: if you are part of the 16.8% underemployed, it feels like 100%, no matter how the other 83.2% are doing.
Why all this attention on the jobs number? Because human capital (the amount you earn during your working years) can be just as important as investment capital. This is the reason why we start most client meetings with a review of current employment – job security, potential for advancement, excitement about the job vs. burnout, willingness and/or ability to change careers, etc. It is one way we can tell whether a client is in the right portfolio model and whether their risk tolerance matches the investments we are making for them. Jobs always matter – whether they are yours or someone else’s.
Tune in to News Talk 630 WPRO and 99.7 FM daily for our "Making Money Updates". Get the latest market news and our take on the day's events with our market commentary at 8:10am and 5:32pm. For more information, visit www.StrategicPoint.com.
*Past performance is not indicative of future results. Indices are unmanaged and you cannot directly invest in them. The Nasdaq Composite Index measures all NASDAQ U.S. and non-U.S. based common stocks listed on the Nasdaq Stock Market. The S&P 500 index is based on the average performance of 500 industrial stocks monitored by Standard and Poor’s. The data referred to above was taken from sources believed to be reliable. StrategicPoint Investment Advisors has not verified such data and no representation or warranty, expressed or implied, is made by StrategicPoint Investment Advisors.
Visit the weekly eNews archive |