WASHINGTON, July 6, 2012 – Another short column today on what is likely to be lightly traded but very negative Friday market action. Right on schedule at 8:30 a.m. this morning, the Feds came out with what the Maven fully expected to be a disappointing if not disastrous job creation number. Futures, which had been barely positive, have tanked, with Dow futures down roughly 70 points five minutes before the market open.
The government reported that the economy created a mere 80,000 jobs in June, a pathetic figure. Even optimists had only been predicting the “expected” number of +90,000-100,000. Recall that early in Great Depression II, consensus was that it would take over 300,000-350,000 new jobs a month just to start getting the unemployment rate down a little bit. So how’s that 80,000 workin’ out for ya?
As a result of today’s figures, the official unemployment rate remains at an unacceptably high 8.2%. Hope and change in action. And keep in mind that economists privately estimate that actual unemployment remains significantly higher, by perhaps twice the reported figure due to the amazing fact that, once you’ve stopped receiving unemployment bennies, you’re summarily dropped off the unemployment statistics. How’s that for accurate accounting?
This chicanery protects politicians to some extent because the media purposely only pays attention to the official number which, of course, is always significantly lower than reality. And we won’t even get into the subject of underemployment, such as former small business owners queuing up for part time jobs as Wal-Mart greeters @ $10.00 and hour or so.
On the current numbers, CNBC reports a comment from a regional CIO for a division of Wells Fargo. “’What a disappointing number,” said Jeff Savage…. ‘This was kind of disastrous. We’re not even keeping up with demographics at this point. This is not going to be liked in the markets.’”
Ummm, yeah. As of 9:34 a.m. EDT, the Dow is already off 125 points and counting, followed by an equally negative S&) 500 at a negative 12.5 or so. On a lightly-traded Friday before another weekend during which the Euro-trash elite could fumble again and during which the Iranians may very well do even more saber-rattling, those traders who are left on the floor will be selling, shorting, and heading for the exits and the beach as soon as they can.
One major brokerage is recommending that its retail investors stick pretty much to utilities and consumer staples, even though they generally recommend wider diversification. There are just too many uncertainties in the market right now, and the uncertainties continue to pile up.
The latest additions in the fear-and-loathing column are the LIBOR interest-fixing scandal, the official commencement of international sanctions against Iran, and a host of minor issues like Paraguayan unrest, the apparent takeovers of Egypt and now Libya by Islamic radicals, and reports from Iraq that mass quantities of Al Qaeda fanatics are rushing to Syria to join in the murderous fun. Not a time to keep your hand in the game during weekends when you can’t draw another card.
We should’ve put our shorts back on before the close last night, but we put them on when we got out of bed this morning. Too late. So we enter the weekend unhedged in Maven Land, or at least right now. But with mostly utilities and REITs in the invested portion of our portfolio, the damage shouldn’t be horrendous.
As we advised yesterday, keep your own mattress well stuffed with Benjamins, keep your powder dry, throw some ribs on the barbie, and have a great weekend. We’ll return to fretting, worrying, and outright complaining on Monday.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
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Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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