|Dow||+20.17 to 16,976.24|
|S&P 500||+1.30 to 1,974.62|
|Nasdaq||-0.917 to 4457.734|
|10-YR Yield||+.060 to 2.625%|
|Gold||+0.80 to 1,327.40|
|Crude Oil||-1.10 to 104.24|
Today, we continued to flirt with Dow 17,000. I haven’t seen any hats printed up on Wall Street, like when we broke Dow 10,000. But it’s still a heck of a milestone considering this bull market began all the way down around 6,470 in March 2009.
But there’s been one key, missing ingredient throughout this bull run. Jobs. Lots and lots of real, high-paying, healthy jobs. The kind of jobs that provide a lasting, strong economic recovery that benefits all of America, not just the 1%-ers.
That brings me to this morning’s data from ADP Employer Services. The private company releases its data on monthly job creation a day or two before the Labor Department, and the report that came out today wasn’t just strong. It was colossal! The details:
- According to ADP, the economy created a whopping 281,000 jobs last month. That blew away the average economist forecast of 205,000. It blew away the 179,000 increase in May. And it was the strongest number we’ve seen in any month since November 2012.
- In addition, every category of company – from big to small to in-between – added workers. So did both service-sector (230,000) and goods-producing (51,000) employers.
- Economists were expecting the official number to come in around 215,000 when it’s released tomorrow morning. We’ve already seen the longest stretch of 200,000+ monthly job creation since 1999-2000, and this ADP report suggests the string will continue (even though there is always some variation between the two reports)
If you’re a graphical person, by the way, here’s the 12-month history of ADP job creation figures. You can see just how much this latest reading stands out!
Could we be on the cusp of a 300,000-jobs month from the Labor Department? Could we finally see a meaningful pick up in wages? Could this signal that average Americans will participate more meaningfully in the recovery, rather than just the Dow? Heaven knows it would be a long-time coming!
Personally, I’ve been pretty optimistic about the U.S. economy for roughly two years now. I’ve said that many investors, economists, and policymakers are still stuck in crisis mode thinking … when the crisis of 2006-09 is years behind us!
That doesn’t mean it’s all puppy dogs and ice cream forever, or that the economy is going gangbusters. But it does mean you can profit from select sectors of the economy in their own bull markets (domestic energy, aerospace, health care, etc.). And it does mean that interest rates and Federal Reserve policy make absolutely, positively zero sense anymore!
|This bull market still needs lots of real, high-paying, healthy jobs.|
I mean, do you know what the 10-year Treasury was yielding back in 1999-2000 when we last saw job creation like this? Try around 5.5-6.5 percent, depending on the month. Some sectors are showing their best job growth since the mid-2000s, too. That’s when 10s were yielding around 45 percent, depending on the month.
Look, Chairman Janet Yellen and her cronies have been hopelessly behind the times for several quarters now. They should have already started normalizing interest rates, given the fact we put the worst of the credit crisis behind us a half-decade ago.
They will now have to do so. All that claptrap about rates staying near zero through 2015 or 2016 just doesn’t hold water in the face of rising job growth, surging asset prices, and higher inflation. Heck, the only people aggressively peddling that line of thinking are the big bond fund managers who desperately want to keep you invested in their lousy products.
“Chairman Janet Yellen and her cronies have been hopelessly behind the times for several quarters now.”
I’ll be closely watching 3.5 percent on the 30-year Treasury bond and 2.67 percent on the 10-year. If we breach those levels to the upside, I believe it’ll be “Katy Bar the Door” time for interest rates.
So if you haven’t already A) dumped most of your bonds, except very short-term ones B) added more exposure to investments that benefit from a higher-inflation environment, like gold and C) shifted from rate-sensitive stocks to growth-sensitive ones in private bull markets, don’t wait any longer! We could finally be on the cusp of a broader economic recovery, and that means there’s a whole new list of potential winners and losers for you to invest in … or avoid.
|OUR READERS SPEAK|
In light of my article yesterday about U.S. economic prospects being better than those in Europe, opinions were all over the map.
Reader Mike S. credits the Obama administration with cleaning up the mess from the recession, setting the stage for years of growth just like FDR did in the 1930s. His take:
“We’ve been here before. It was 1932 and FDR had started the “New Deal” and the CCC camps were opening up … Soon foreclosures would drop as those young men sent their paychecks home and the economy began to improve. The stock market bottomed and then began to explode higher.
“Here we are 77 years later and another Democratic Administration has brought another bottom to the 1929-style Crash of October 2007-March 2009 … Obama brought the PIP program in coordination with the QE program by the Fed and soon after brought Obamacare, which finally offers medical insurance for everyone in the U.S.”
His conclusion: “We are going to have another 50 years of prosperity under Democratic Domination, just as we did from 1932-1982.”
On the other hand, Reader Frank doesn’t put much stock in the economic recovery story. His opinion: “All nonsense, America has 100 trillion in unfunded liabilities, 17 trillion and rising foreign debt, inflation compliments of the Fed that has merger and acquisition fever at full pitch.”
He added: “As long as America is practicing Imperialism we will be throwing our possibility away and history tells us there is a bad ending in store!”
The bottom line? Opinions on the economy vary widely, as do opinions on who is to blame or thank for the current state of affairs. I offered my view earlier, and would love to see even more of you weigh in on the comment section. After all, it will help your fellow investors make more informed decisions!
Finally, Reader Maria asked: “Mike, are you going to recommend any miners or gold ETFs? How about floating rate bonds?”
The answer: I have recommended several investments focused on precisely those parts of the market in my Safe Money Report. In fact, in the issue that went to press yesterday, I added more exposure in the gold mining sector for the first time in years!
If you want to get the details or kick the tires on the newsletter, all you have to do is click here or give us a call at 800-291-8545!
|OTHER DEVELOPMENTS OF THE DAY|
Who doesn’t like CAMP in the summertime? Apparently investors in CalAmp (Weiss Ratings: CAMP, C+)! They dumped shares of the wireless networking firm after it warned of weaker-than-expected second-quarter results.
On the other hand, Shutterfly (Weiss Ratings: SFLY, C-) shares took flight after reports surfaced that the company is putting itself up for sale. My wife and I use the online photo service to make albums as gifts. But apparently not enough other folks are doing so. Shutterfly is on track to report its first full-year loss since it went public in 2006.
Gold prices are starting to rise again, and inflation is on the up and up. But investors haven’t embraced the rally … yet. That’s the verdict of the London-based firm, BullionVault. The company’s index of investor interest in gold fell to the lowest since February 2010 last month.
From a contrary perspective, that’s probably good news for gold bugs. It means plenty of investors haven’t been converted yet, and that there’s plenty of untapped buying potential as a result. For the record, as I mentioned earlier, I’m starting to add to gold positions for the first time in years.
Well, my best hopes for a U.S. World Cup victory yesterday were dashed by an overpowering Belgian team. We couldn’t get any real offense going until extra time, despite some incredible heroics by our goalie Tim Howard. And the result was a 2-1 defeat.
That said, I really do believe soccer is a sport on the up here in the U.S. And if we can keep up the momentum in recruiting, coaching, and training, the U.S. could do even better in the 2018 Cup. In the meantime, my other team (Germany) is still in the hunt – so let’s see if they can go all the way!
Reminder: You can let me know what you think by putting your comments here.
Until next time,