Well, I must admit, I am feeling good this Friday. I get to cook for and attend my god daughter’s birthday dinner tonight. Okay, so I also feel good about the market. Today is another day of what appears to be a settled market. Yes, a little forward and a bit less back is the sign of market accepting fundamental reality.
- U.S. job growth increased at a fairly brisk clip in October and the unemployment rate fell to a fresh six-year low of 5.8 percent, underscoring the economy’s resilience in the face of slowing global demand.
I know, I know, some folks just are not happy. “Sure,” they say, “people are working, the unemployment rate is down, but the participation rate is not what it used to be.” True enough. The US labor participation rate, according to the Bureau of Labor Statistics, is lower than it has been in decades at 62.8%. Granted, this is not good for those who have given up looking for work, but the sad truth is that many of those out-of-work, middle-aged factory workers without an education or another viable skillset will never work again in their field because their jobs are gone and they are not coming back, ever.
I have written about this before, but it bears repeating as it relates to this argument about the US labor participation rate. The US, and the world, for that matter, are rapidly shifting to a new reality, a reality driven by technology of the highest order. And in that reality, the hands-on, factory line-worker is not needed anymore to any great degree, unless, of course, he or she can run an enterprise software system, repair a robot, or otherwise technologically operate within the factory.
So, for now, the participation rate in the US labor force will have to creep up as the younger folks coming out of college, prepared with the proper credentials and training fill the new jobs created in the New Economy (now, this term finally means something).
As this relates to the market, well, it means what we have labor wise is the best we can have for a while, so, play the market as it is, not as what others say it should be. The fact is that enough folks are working to keep the US consumer-spending rate high enough that US corporations are banking profit at an increasing rate, and that is what the market cares about.
- Unfazed by slumping oil prices and battering in the stock market, firms that supply sand and guar gum for shale oil and gas companies are not ready yet to call an end to a four-year boom.
The above is more good news, at least for the US consumer. Gasoline prices are trending down like the sales of the latest fad gone bad. Why, right here in River City (okay Central California), gasoline prices are looking to go below $3.30 and at our local Costco, they are sitting at $3.13. Given that a month ago, they were in the $370-$3.80 range, the downward trend seems pretty steep to me. And there is no reason prices will not keep going down, as the above information about the US oil producers suggest.
Remember, these guys cannot just pull the plug on production. They have financial commitments that take them years into the future. Oil will have to go pretty low ($60?) before it will make sense to pull the plug for financial reasons.
Speaking of oil and making sense financially …
- Russian Central Bank Sees Risks to Stability, Ready to Increase Interventions at Any Time as Ruble Weakens With Oil.
Actually, the above is good news, as the worse it gets for the average Russian Josefina, the better it gets for the world. Putin is no idiot (debatable, yes), and, at some point, he will pull the plug on his idiotic ventures in Ukraine and the sanctions will come to end. The war between the US/Europe and Russia will come to an end, which will then allow the Eurozone to pick up economic steam again. This, then, will make the phrase “in the face of slowing global demand” gradually disappear.
In the meantime, Putin will keep pumping the oil because his country needs the money and that will keep the oil glut alive and well.
Finally, we are in a “Brave New World,” and that is good, but with the good comes the bad. The information below is bad, way bad.
- Home Depot Inc., the world’s largest home improvement chain, said hackers stole about 53 million email addresses in addition to customer data for 56 million payment cards previously disclosed by the retailer.
The problem here and elsewhere in an economic system now dependent on 0s and 1s is that computer programmers always, and I mean always, have to leave a back door, in case they need to get back in. This means there are no totally secure systems. The best that can be done is to hide the back door and that is what the hackers drinking coffee in the dark of night spend their time doing – looking for the back door.
Have a good weekend …
Trade in the day; invest in your life …
