On the plus side? The U.S. economy added 242,000 jobs last month. That topped estimates for a reading in the 190,000s. The figures for December and January were also revised higher by a combined 30,000.
Sectors like retail (+55,000), health care (+57,000), food and beverage (+40,000) and construction (+19,000) showed healthy gains. The unemployment rate also held at an eight-year low of 4.9%.
So what were the negatives? Well, let’s start with average hourly earnings. This key gauge of wage growth actually fell 0.1%, the first monthly decline since December 2014. The average workweek also dropped by 0.2 hours to 34.4.
|The unemployment lines got shorter, but wages continued to stagnate.|
We continued to see pressure in sectors that have been hemorrhaging jobs for a long time. Mining lost another 19,000 workers, while manufacturing lost 16,000. The ISM services sector index wasn’t very inspiring either. It dropped to 53.4 in February from 53.5 a month earlier, leaving it at a two-year low.
The markets haven’t cared much in the last two weeks about the U.S. data. Hopes for a big Chinese stimulus program this weekend, and for a European Central Bank policy program next week, have clearly been in the driver’s seat. But once those shorter-term influences sort themselves out, we should see investors focus more on the mixed picture here at home — and the important shifts we’ve seen in the credit cycle since 2015.
So what do you see in these latest jobs figures? Reason for optimism? Pessimism? Something in between? Any thoughts on the market action of late? Is this the start of a new bull market? Another bear market bounce? What actions are you taking in your own portfolio here in light of the latest trading activity? Share your thoughts below.
What’s wrong with the economy? And what’s right with gold and higher-yielding stocks? Those were a couple of the topics you discussed online in the past 24 hours.
Reader Howard weighed in on the economy, offering the following batch of extensive comments: “Why are the rich getting richer and the poor getting poorer? It could be useful to look at Washington as a business and this presidential election based upon all Washington’s previous results. The leaders should have been sacked long ago for complete incompetence.
“With many years of increasing debt, there are no dividends, due to heavy losses recorded over past decades. Our workers are in desperate need of a minimum wage increase to $15-an-hour. But with a succession of free trade agreements since WW II, most of our manufacturing has been transferred overseas. We also run the world’s largest dependency and entitlement programs with massive support for food stamp distributions.
“The hidden side of our poor performance is the high number of insiders, lobbyists and special-interest groups. Huge numbers of bureaucrats with copious amounts of red tape stand in the way of real progress.”
As for how to invest in an environment where Washington is hurting, rather than helping, the economy, Reader Jim offered this take: “My uncle has always relied on me for investment advice. Because he is very conservative, I have never recommended anything but telecom and utilities. He thinks I’m a genius!”
Reader Lifestudent 38 weighed in on gold, saying: “Gold has always stood the test of time since civilizations ascribed value to it, and it will continue to maintain that perceived value as long as civilizations keep ascribing that value. In this tumultuous environment, the only true logical investment is in gold! As for traders, many opportunities are abounding in this volatile season.”
Reader Chuck B. also shared his take on the yellow metal: “Gold moved significantly above the upper line of its 2-½-year down channel yesterday, ending the channel. It could go higher before coming back to retest that line.
“Gold and gold stocks could be ready to boom, as they likely would in a time of financial trouble such as Mike is talking about. After the recent run-up, though, a bit of retracement wouldn’t be out of the question first.”
Thanks for sharing. Gold definitely looks like it is pulling out of its multi-year funk, while higher-yielding (but SAFE) stocks are continuing to deliver a nice combination of yield and stability. Both do look like they could pull back to consolidate their gains, though, as Reader Chuck B. noted.
Meanwhile, in stocks, it’ll be very interesting to see what happens once all the hype about new Chinese and European stimulus dies down. That’s when investors will have to refocus on the fundamentals, which still don’t look all that encouraging to me. If you want to comment further on my outlook, please feel free to do so in the discussion section below.
That flood of money into high-risk technology startups and so-called “unicorns?” Yeah, it’s over. The Wall Street Journal reports that mutual fund firms like BlackRock (BLK) and Fidelity Investments are slashing the value of their stakes in private companies, and adding far fewer new positions.
This comes after those firms all dog-piled into these kinds of tough-to-value, illiquid positions during the easy-money boom. Expect layoffs, firm closings, rising vacancies, and other problems to spread in Silicon Valley over the next year or two as liquidity drains out.
The political scandal in Brazil tied to corruption at national energy company Petrobras (PBR) keeps getting more sordid. Brazilian police just raided the house of the country’s former president, Luiz Inacio Lula da Silva, bringing the once-popular politician in for questioning. Dozens of searches and detentions have been carried out amid widespread allegations of bribery, money laundering, and other forms of corruption in the country.
The intrigue surrounding international currency markets and central bank policy is ratcheting up. The Wall Street Journal reports that top officials from the eurozone warned Japan to stop trying to drive down the value of the yen, a cornerstone of that country’s efforts to revive domestic inflation. That’s pretty rich when you think about it, considering the European Central Bank launched an all-out de facto war on the euro’s value in 2014 through quantitative easing. But the U.S. and Europe say that indirect devaluation tactic is okay; it’s only direct devaluation moves that are frowned upon. Ha!
Elsewhere in Asia, China’s National People’s Congress meets this weekend. Stocks, commodities, and other “risk on” assets have been rallying this week amid expectations Chinese policymakers will unveil new stimulus measures at the event. State-backed funds intervened in the Chinese stock market to artificially prop up large-capitalization stocks on Friday ahead of the gathering, even as smaller-capitalization names tanked.
So we have currency manipulation in Japan, stock manipulation in China, and a massive bribery and corruption scandal in Brazil. Any thoughts on all of that? What about the draining of liquidity in tech-land? Will that help put downward pressure on publicly traded technology shares? Let me hear any thoughts you have on these topics when you have a minute.
Until next time,
P.S. Our membership rolls for Global Currency Investor are filling up fast! The good news is that there is still time to get on board so you don’t miss Boris and Kathy’s next recos, and STILL receive a $2,100 discount on your risk-free membership.
Fair warning, though: Enrollment may close at any time without notice … the minute we hit our membership goal … and you owe it to yourself to get the facts before you make your final decision.
CLICK THIS LINK to review the benefits of joining and activate your membership while you still can.