U.S. stock index futures are pointing to a slightly lower
opening on Thursday. The focus remains on Washington politics, especially
health care and now the Democrat senate and house personnel changes as
key players retire. The employment report will be the short term catalyst,
so expect cautious trading today.
Today's Economic Calendar:
- Chain Store Sales
- Monster Employment Index 6:00 AM ET
- Jobless Claims 8:30 AM ET
- 30-Yr Bond Announcement 9:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- 52-Week Bill Announcement 11:00 AM ET
- 3-Yr Note Announcement 11:00 AM ET
- 10-Yr Note Announcement 11:00 AM ET
- 10-Yr TIPS Announcement 11:00 AM ET
- Treasury STRIPS 3:00 PM ET
- Fed Balance Sheet 4:30 PM ET Money Supply [Bullet4:30 PM ET
News For Thought
Changes, changes, and more changes.. According to The The New York Times: "The
South has become the first region in the country where more than half of public
school students are poor and more than half are ethnic minorities, a report found."
China raises interest rates. According to The Wall Street Journal: "China's
central bank unexpectedly raised a key interbank market interest rate Thursday
for the first time in nearly five months, signaling a change in its policy focus
toward pre-empting inflation risks in the new year. The tightening move, in the
form of a higher yield in its weekly bill sale, came less than a day after the
People's Bank of China hinted its priorities had shifted toward managing inflation
expectations and away from single-mindedly supporting economic growth."
Telecommuting and self employment grow as joblessness remains high. According
to The The Wall Street Journal: "A growing number of workers face these hassles
every day. As of November 2009, there were nine million self-employed workers
in the U.S., according to Bureau of Labor Statistics data. Meanwhile, the volume
of workers telecommuting at least once a month for employers grew 17% between
2006 and 2008, to 33.7 million workers."
Self described "Chinese Warren Buffett" wanted in Canda. According to
Reuters: "Weizhen Tang, 51, is accused of defrauding more than 100 victims in
Canada, China and the United States, according to Toronto police. Ontario securities
regulators barred Tang in June from any trading activity and warned investors
on Wednesday they believed Tang was against soliciting business from relatives
of his previous victims. Tang, who local news reports said was believed to have
fled to Hong Kong, was scheduled to go on trial in Ontario for alleged security
violations in April, according to the Ontario Securities Commission." Mr. Tang
is alleged to have run a Pozi scheme.
One in five Guantanamo detainees released rejoing militants. In a head
scratching report, more because it's so obvious that even the White House has
to get it, Reuters reported: "A classified Pentagon assessment shows about one
in five detainees released from the U.S. military prison at Guantanamo Bay has
joined or is suspected of joining militant groups like al Qaeda, U.S. officials
said on Wednesday." Reuters added: "More than 560 detainees from Guantanamo have
been released, the vast majority of them by the Bush administration. An Obama
administration official said the White House had received "no information that
suggests that any of the detainees transferred by this administration have returned
to the fight." That's almost as if they were saying that the carbon emmitted
from the president' motorcade hasn't been proven to contribute to global warming,
if there is such a phenomenon.
Today's news items continue to hightlight the emerging trends of this new decade,
including population shifts, new trends in the workplace, interest rate trends,
and the one thing that never seems to change, the government's lack of coordination
between key agencies, especially in intelligence where some would rather play
politics while others actually try to do the right thing.
These new trends and the inefficiencies in the system will continue to create
opportunities for investors, managers, and business people. We're here to help
you make sense of them.
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While Americans may hate their job, those who actually have
jobs are in better shape than those who don't. That's why this Friday's
employment data will likely set the tone for trading in the U.S. stock market
for some time.
A recent survey from the Conference Board confirmed what many of us who work
for a living already knew. Lots of folks don't like their job. According to the
report, 45% of those surveyed said they were satisfied with their jobs, down
from 61% in 1987. According to The Wall Street Journal: "The drop in job satisfaction
between 1987 and 2009 covers all categories in the survey, from interest in work
(down 18.9 percentage points) to job security (down 17.5 percentage points) and
crosses all four of the key drivers of employee engagement: job design, organizational
health, managerial quality, and extrinsic rewards."
All ages were just as unhappy, suggesting that the problems are accross the board
and that they may have some long term implications for corporations as well as
individuals. According to The Journal, there are multiple factors causing the
results as "more companies have dropped or cut pension benefits and asked employees
to contribute more to health care. Meanwhile, wage growth has been relatively
stagnant. Ironically, the two-decade decline in happiness has coincided with
substantial increases in worker productivity. Gains in the tech sector have ensured
that even as workers become more unhappy, they have become more productive."
In the short term, though, our employment bellwether stocks suggest that Wall
Street is leaning toward a more positive employment report than they perhaps
received last month where there was a significant up side surprise.
Last month's report surprised traders with a much less than expected 11,000 jobs
lost. Estimates for this month are between 40,000 jobs lost to 50,000 jobs gained,
a fairly wide range. Preliminary indicators have been mixed but when taken together
suggest that a bottom has been put in place and that job losses are likely to
continue to decrease, at least in the short term. The key, though, is whether
jobs will actually be created, and at what pace. Wall Street would likely take
a decent job gain as a positive, as it would illustrate that the economy is recovering
but at a pace that won't make the Federal Reserve raise interest rates too aggressively.
China raised interest rates overnight.
Administaff (NYSE: ASF) our small business barometer has stabilized. This makes
sense, given some of the items that we have been reporting here. For example,
outsourcing to contractors by small and large businesses seems to be stabilizing
and may be on the rise. At some point that could lead to companies starting to
hire temporary consultants and other workers, a prelude to a possible rise in
Administaff's business, that of human resource management for small to midsize
companies.
Chart Courtesy of StockCharts.com
Our second bellwether, Monster Worldwide (NYSE: MWW) has been on a tear lately.
The latest Monster Employment Index (December) fell. Yet, the company notes that
this is a seasonal tendency and that overall it sees improvement in the job market
as the index's year over year decline was the smallest in 18 months. Of some
concern in the Monster Index was the drop in the reading for New England. According
to the report, the demand for online workers in Massachusetts "slipped to a five-year
low." There was no reason given for the drop. Yet, one could speculate that cold
temperatures may have had something with it. The state, though, has a rather
ambitious health care mandate in place, which may be affecting hiring practices.
Chart Courtesy of StockCharts.com
Our third bellwether, Manpower Inc. (NYSE: MAN) has also been moving higher.
This stock's performance reflects Wall Street expectations for hiring at the
upper end of the curve, the executive suite. Manpower's rise of late, though,
has been linked to a brokerage house upgrade.
Chart Courtesy of StockCharts.com
Conclusion
The U.S. economy is all about jobs. And jobs are linked to trends, economic,
demographic, and also to interest rates.
Today's IQ suggests that we are at some sort of crossroads. The item in our "News
for Thought" segment about the changing demographics in public schools is likely
a prelude to important changes that lie ahead in the U.S. Aside from cultural
changes, there will be more opportunities for businesses to cater to different
tastes, which in many cases will be influenced by ethnicity.
Our lead tells us about how most Americans hate their jobs and why. Companies
have lost touch with their employee's needs. The drive toward globalization and
quarterly profits has created an atmosphere of disatisfaction. As CEO's and upper
management get more, workers have been getting less. No, we're not turning left
here, we're just pointing out the facts.
It's not accross the board, but it's a phenomenon that is spread out widely throughout
the economy. The key is what you do about it. You can look for government to
correct the imbalance, Obama's way, or you can look for a way to do it yourself,
the founder's way. The key is to find the right combination and to make it work
for you. There are still plenty of opportunities left, despite Congress and the
White House.
Businesses who adapt, or cater to special niches will likely survive and even
thrive during difficult times. In Dallas, the Fiesta supermarkets, which cater
to Latin American tastes are hugely successful, as they deliver products that
satisfy the traditional needs of that population segment. And the fact that they
provide the things that these folks need, at a reasonable price, allows them
to mark up prices for mainstream products such as detergents, soft drinks, and
sports drinks, creating a series of profit centers for the store.
Fiesta's lower prices, though, attract all ethnic groups, including non Latins,
thus expanding the company's sales. Fiesta started in Houston and now has 55
stores in Houston, Austin and Dallas. The company was started in 1972 and was
acquired in 2004. It's privately owned.
Yet, the founders of the company saw something that turned out to be not just
correct in its vision, but wildly successful and that is a perfect example of
where we are today.
1972 was the year before the 1973-1974 bear market and recession. Yet, it was
a perfect time to launch a store that catered to folks with modest income and
special needs.
What's the bottom line? We look upon this time as a similar one to 1972, and
suggest that you consider this point of view as well. Complaining is negative,
while thinking, preparing and looking to succeed are all positive and worthwhile
endeavors. It's all about how you look at things. Meanwhile, we trade.
Know when to sell and how to make money when the market falls. Get a detailed
trading plan in your pocket. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for
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