JOBS

We all need 'em, that's for sure!

Thursday saw the usual release of weekly jobless claims and for eco-stat lovers like us, we can't help but put this data under the microscope. The 12,000 job decline was a bullish sign for the overall economy, but continuing claims rose once again. Later in the day the Philadelphia Fed manufacturing index pointed to employment weakness in the region. So while the broader gauge of business sentiment in the Philly-area jumped from an August reading of 4.2 to 14.1 for September, it was a decline in the employment index that caught investors' eyes. It fell back into negative territory from minus 12.9 in August to minus 14.3.

Earlier weakness in treasury prices reversed on the news sending yields plunging from 3.48% to 3.40%. The Philadelphia manufacturing region is said to be one of the best indicators of the broader national economy, hence investors follow this gauge closely. That's another reason why stocks stopped rising Thursday - investors pulled in their horns and started to get cold feet over just how brisk recovery might be. But first we have to contend with how long the pain of recession might last.

Next week the government will auction $112 billion in debt after last week's total of $70 billion and we await with baited breath to see just how investor appetite will be if the yield curve remains this low into next week.

Another report showed that housing starts rose at the fastest pace since November indicating confidence among builders that future demand for housing will soon be back. As global stock markets have risen during the past two quarters and home values have steadied so to has household wealth. A report Thursday showed a $2 trillion rise in household net worth in the second quarter. All good news for consumers. It was the first gain since the third quarter of 2007.   

For stock markets, which edged ever-so slightly lower, it was the same story with bears convinced that the market has been rallying way too long without just cause. Yup, that's about the size of it, but in our experience you can't stand in the way of markets when they do this. By Friday, we'd not be surprised to see the S&P stretch valuations further. Is this a case of markets trading on vapor fumes? You can bet your bottom dollar on it - but we don't care! A market with momentum will perform the only way it knows how. When it cracks, you'll be the first to know. Until then, join in or shut up!
 
While the U.S. dollar continued to look weak on the foreign exchanges, declining against the euro to its weakest since late September of 2008 it wasn't enough to spur commodity prices higher. In that sense Thursday was somewhat of a confusing day. The price of gold waned a little easing less than 1% to stand at $1,013.50 per ounce for December delivery. Typically gold finds favor with investors as the dollar loses value. The overriding concern at this juncture is that demand for jewelry will suffer in key markets such as India with gold at an outrageous price - that doesn't mean, by the way, that it won't go higher. We see gold ramping up to perhaps $1,300 an ounce before long.

According to one analyst's observation of the Indian gold market, demand in the nation stands as much as 10% lower than one year ago, which leads to a prediction that imports may fall 37% this year hampered by increasing costs and wary buyers.

So will the 15% rally in gold in 2009 be sufficient to stymie demand? Used-gold buyer, Cash4Gold LLC says that it's received many more enquiries with eth price of gold above $1,000. By the way, the price of bullion has closed above $1,000 for five straight sessions now, which could make today rather interesting - especially if the dollar stages a last-minute short-covering rally around lunchtime.

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