The unemployment rate soared to 6.5% (click on graph to enlarge). The economy is still in a recession. Is this environment creating investment opportunities? I believe so.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Nonfarm payroll employment fell by 240,000 in October, and the unemployment rate rose from 6.1 to 6.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.
October's drop in payroll employment followed declines of 127,000 in August and 284,000 in September, as revised. Employment has fallen by 1.2 million in the first 10 months of 2008; over half of the decrease has occurred in the past 3 months. In October, job losses continued in manufacturing, construction, and several service-providing industries. Health care and mining continued to add jobs.
Our leaders keep scrambling to find stimulus packages. They are still talking about them. Talk. Talk. Talk. And throwing money at any problem it surfaces from banks to auto manufacturers. Improvising.
What intrigues me is that we knew last year of a credit crisis. We knew last year that it would have affected the economy in a negative way. Yet no plans were drawn for these emergencies. In fact, a presidential candidate was running on the idea of increasing taxes. It tells you how these people live in a different world.
It shows once again that bureaucrats react to the news. They do not try to anticipate. They cannot do it. It is not in their job description.
Social engineering created this mess. The markets always win and correct in a dramatic way the policy mistakes of any country. The bigger the mistake, the bigger the correction. The ultimate example is the USSR. Given what we are enduring, the attempt to provide a house to all of us independently of our means, was not the right policy.
A restrictive Fed from 2004 to 2007 precipitated the crisis and made matters much worse than they could have been.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
It is difficult to be optimistic these days. Every day there seems to be new bearish developments.The latest news is that the global economy is in deep trouble, as documented in detail every month in The Global Business Cycle as part of our service to clients.
The world manufacturing sector suffered its sharpest contraction in survey history during October, as the ongoing retrenchment of global demand and further deepening of the credit market crisis negatively impacted on the trends in output, new orders and employment. The Global Manufacturing Index dropped to 41.0, its lowest reading since data were first compiled in January 1998 and a level below the no-change mark of 50.0 for the fifth month in a row.
Output, total new orders and new export orders all contracted at the fastest rates in the survey history in October. With the exception of India, which again bucked the global trend, all of the national manufacturing surveys posted declines in output and new orders. The impact of the downshift in global market conditions also had a far-reaching effect on international trade volumes. Although new export orders fell at a slower rate than total new business, all of the national manufacturing sectors covered by the survey (including India) saw a reduction in new export orders.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Financial stocks are among the strong performers (click on table to enlarge).
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Jean-Claude Trichet is extending the European Central Bank's powers just as it gears up for what may be the fastest round of interest-rate cuts in its 10-year history.
President Trichet has pushed the central bank's reach into the euro region's neighboring economies as they struggle to cope with the financial crisis, and has approved record lending to banks. Economists predict the ECB will slash its benchmark rate, currently at 3.75 percent, to 2.5 percent by April after reducing it for the second time in a month on Nov. 6.
Bottom line. The global central banks are aggressively easing. Good news for some assets classes, bad news for others.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
In 2007 this proprietary indicator soared (click on graph to enlarge), suggesting the market had reached high risk levels. The message was quite correct.
A decline of this gauge to lower levels is a reliable signal the market has declined to a profitable entry point for the next several months.
I will discuss the behavior of this indicator in the next issue of The Peter Dag Portfolio.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
I highly recommend you read the following by Jeremy Grantham. He is a superb observer and a successful investor. There are too many gems to be mentioned here.
Please go to http://www.gmo.com/websitecontent/JGLetter_3Q08.pdf and enjoy his perspective and wisdom! It will give you an excellent perspective on what has happened, what is happening, what will happen, and the players.
More, much more of my analysis and recommendations when you read older posts in the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
In a nutshell.....
*** The Fed lowers interest rates….a symbolic gesture
*** Stocks down 1%, including financials
*** The dollar weak
*** Commodities strong
*** Gold stocks very strong
*** Energy complex really strong
*** Low grade bonds very strong
*** Long term Treasuries (prices) down
*** The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore to boost the liquidity of dollars in emerging markets.
Bottom line. Money is sloshing around the globe. It is good news for some asset classes. Not for others.
More, much more of my analysis and recommendations when you read the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
....the Europeans are attempting to get organized and do something about the credit problems.
UK PM Gordon Brown and French President Nicolas Sarkozy have warned urgent action is needed to prevent the current financial malaise spreading, according to BBC news. The two leaders were meeting in France.
Mr Brown said the first priority was "to stop the contagion to other countries, including in eastern Europe" where there were "problems emerging".
He said the IMF would have to create a new fund to help struggling nations.
And Mr Sarkozy also wants a crisis fund for EU member states expanded from 12bn euros ($15bn;£9.6bn) to 20bn euros.
My thought is that the Europeans still need to be convinced that this is not only America's problem. The also needed to be convinced that terrorism was a global issue after 9/11. Not just an American event.
More, much more of my analysis and recommendations when you read the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
Wow! Will it last? Let's hope so. This is what happened today.
*** Stocks were very strong. Wonderful! The market did in one day what it used to do over one year in the good old days. Times have changed. Or did they?
*** The dollar was mixed. Surprising. Probably not for my readers.
*** Commodities were strong across the board. Crude oil and gold included.
*** Long bonds (Treasuries) were weak.
*** Low grade bonds were weak.
*** Sectors performing well in a weak economy soared.
Bottom line. A great day. It needs confirmation.
More, much more of my analysis and recommendations when you review the blog archive and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
