The number of jobs was dismal, but the Fed could slow down its bond purchases on schedule anyway
This commentary was posted recently by fund managers, research firms and market newsletter writers and was edited by Barron’s.
September 3: The August non-farm wage report was released at 8:30 a.m. today. Boy, was that another stench compared to what was expected: 235,000 new jobs were created, well below the expected 750,000. However, the unemployment rate fell 0.2%. Regardless of the turn of the Biden administration, the economy continues to have its dislocations and struggles. It is indisputable.
“But, Paul, 235,000 new jobs is good, isn’t it? “
In a vacuum, it is. However, at this point in the recovery and with countless billions of stimulus packages in the system, the economy is expected to create over a million new jobs per month. I listened to a panel of “experts” explain that the failed monster was simply due to the Delta variant. Of course, they all knew Delta before planning over 700,000 new jobs. And when we saw employment increase a few months ago, the “experts” all credited the stimulus. Sorry guys, you can’t have both. Something is wrong….
More important than current economic news, my readers know how to watch the reaction of the market. After a quick sell-off, yields reversed and rose 1% on the 10-year Treasury. However, gold has also surged. The actions have done very little. This initially tells me that the market believes the Federal Reserve will go ahead with the cut sooner rather than later and that wage growth will continue to put pressure on the inflation numbers.
Investors, watch the exit
Aden’s forecast: silver, metals, markets
September 2: Safe-haven barometers have remained calm on the downside this week. The
US dollar index
holds up to its 65-week moving average, while gold and bonds remain calm near recent highs. The stock market, especially the tech sector, has reached new highs in this seemingly endless bull market. Weekly jobless claims in the United States hit their lowest level since the start of Covid, fueling optimism. Clean energies and certain raw materials are also stimulated
The stock market bull roars, in part. It is a mixed bull market and a selective market. The
is at an extreme level, but it might stay there a little longer. The [latest] the bull market rise, which we have called the merger, the final rise, is underway, and today’s new high of the S&P 500 is one of them. The PTI [primary trend index] is also at another new high today. They all say stay with your positions but keep an eye out for the exit.
—Pamela and Mary Anne Aden
Stagnation of the population
Sadoff Investment Management
August 31 : The US population grew 0.4% in 2020 to 329 million, marking the slowest growth rate since 1901. A declining birth rate and an aging population could portend major implications for our economy.
The last decade has seen the weakest expansion of immigrants! The average American woman is expected to have 1.7 children, the lowest level in decades. One potential problem: A smaller workforce tends to produce worker shortages and higher wages. The aging of the population is likely to increase the demand for spending on health care and retirement homes.
—Ronald Sadoff, Bryan Sadoff, Michael Sadoff
Higher food costs to come
August 2021 Market Letter
Third Street Agricultural Investments
August 31 : Compared to the three very volatile months that preceded it, the price action in August was rather lackluster. Corn, wheat and soybean futures all had monthly trading ranges of less than 12%, and their net price changes for the month were 0% to 4%. Risks and uncertainties abound, but for the past month, they have offset each other ….
One long-term item that we are watching with particular interest is skyrocketing production costs, particularly for corn. Supply chain disruptions and increased demand have driven input costs to record levels. Sea freight is at its highest for 10 years. The sharp increase in the value of land threatens to drive up these prices for those who do not own their own land. This will put a higher floor under prices and increase food costs for those who can least afford it. It should be noted that the futures contracts for this fall (December corn and November soybeans) were 2% and 4% lower, respectively, but the fall 2022 contracts were both higher this month.
Frenzied stock, debt issuance
August 31 : In addition to record cash flow, companies have raised a lot of money in the bond and stock markets. In the past 12 months through June, they raised $ 2.2 trillion in the bond market. They used the proceeds to refinance outstanding bonds at record yields. They also repaid their bank loans. A portion of the remaining proceeds has funded capital expenditures and share buybacks or is in liquid assets.
The companies raised $ 441 billion on the stock market in the past 12 months through June. Data available up to March shows that the bulk of non-financial corporate issues were seasonal equity issues.
Thanks to the Fed, there is a lot of punch in the punch bowl and companies are enjoying the party.
South Sea Bubble 5.0
August 30: Our long term charts continue to amaze. There are now so many parallels with historical fads such as the South Sea Bubble, the Roaring ’20s, Tulip Mania, and even the relatively recent Tech / Internet Bubble that the current era, in retrospect, may one day seem the craziest of all. all. .
The South Sea Bubble began when the British government borrowed $ 7 million to finance the war with France. In return, the South Sea Company obtained a monopoly of trade with South America. The company also took out all of the UK’s $ 30 million debt at 5% interest. The deal was deemed so phenomenal that the shares of South Sea have increased tenfold. In the process, a real mania was born. Noting the wonders of instant riches, there was an influx of new businesses. We found the following: “One company was started to buy the Irish bogs, another to make a gun to shoot square cannonballs, and the most ridiculous of all, for running a business of one. great advantage but no one knows what it is. is !! ”Not waiting to prove his premise, the owner of the latest business took the first £ 2,000 raised and immediately fled across the ocean.
Today’s parallels are just as crazy, if not hilarious. While the blockchain technology on which many of the roughly 4,500 invented crypto currencies are based is valid, there are many reasons to dispute the ratings.
was created as a real joke, but is still valued at $ 41.4 billion and was worth up to $ 95 billion. A Google search for “Dogecoin intrinsic value” returns “… has no intrinsic value”. Thus, Dogecoin turned out to be the equivalent in 2021 of “pursuing a very profitable business but no one knows what it is”. You can’t make that stuff up, folks.
—Alan M. Newman
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