Friday, January 9, 2015

HAPPY NEW YEAR OVER HERE

The first job report of the year was a good one...or was it?  Seasonally adjusted (I don't know what that means either), the economy created 252,000 new jobs in December.  Good.  Unemployment fell to 5.6%.  Good.  Average wages fell by 0.2%.  Bad.  The unemployed portion of the work force rose to over 62.0%.  Absolute stinko.  Well look, it's better than a poke in the eye (feels better today, thank you).

The equity markets pondered this for a minute and went straight down with the DOW off 170 points at the close.  So, in tying this up in a big bow, what the first of the year brings us is new job creation at a good level but perhaps lacking in quality;  more people falling out of the work force because more are retiring or have simply stopped looking; a decline in hourly wages which suggests a weak job market or a market only for lower-paying jobs; the Fed making coo-coo sounds about interest rates; the dollar up again in trading and economies turning to garbage all around the world.  Conclusions?  The economy stinks except on the lowest rungs of the ladder (I haven't a clue why except that markets are disappearing) and the only trade in town right now seems to be a solid bid in the bond markets.  Can't miss: we're buying them, foreign purchases are higher than ever as a haven from whatever and crashing currencies and the Fed ain't gonna move.  One way traffic from now until...  Problem is when bonds turn they turn all at once for everybody and there's blood all over the place, but until that unlucky day, bid em!  Of course with interest rates at zero there have to be some shorts out there, probably quite a few.  Having not a bean, I can watch this one with amused interest.

The year also started off with Il Duce off campaigning, for what I'm not sure.  Perhaps no one told him the election was over.  His first stop was in a Ford plant scheduled to be shut down.  Somewhere there must have been a reason for that but I can't quite figure it out as of yet.  This is going to be a highly political year with everything focused on the big prize coming up in 2016,  Politics, more than ever before will shape and influence every governmental decision at every level.  It's going to get ugly but in one area--financial regulation--we may see some surprising moves as reelection looms for some prominent Democrats and a split between the Crazy Lizzy camp and Dems seeking Donors may well occur.  Again, amusement on display.

Finally, there has been considerable talk to open the year on the effect of the energy markets on the financial markets.  Having had a bit of oil in my minuscule portfolio I can say with certainty that it could be ugly.  Going to try to look into that over the weekend and report back.  Have to see my eye guy on Monday which means dilation and all of the other goodies so Tuesday will be the earliest I'm back in action.  Wish me luck

Finally, sympathy and prayers to that most beautiful of cities, Paris.  We Over Here know all too well what this is like.  Nous somme tout Parisienne.  Vive La France.


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