Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles.
At the risk of sounding like a broken record, I'll go out on a limb and say it again.
At this point in the cycle it's all about JOBS...JOBS... and — you guessed it — JOBS.
So here we are again, hovering around the all important 10,000 mark hoping the dam will hold — especially in the wake of that lousy jobs number last Friday.
According to the Labor Department, a mere 431,000 jobs were added in May. This figure is well below Wall Street's expectation of 513,000.
What's more: Of that total, a whopping 411,000 came from U.S. Census hiring leaving a paltry 20,000 new jobs outside of these temporary hires.
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Stay on top of the hottest investment ideas before they hit Wall Street. Sign up for the Wealth Daily newsletter below. You'll also get our free report, Gold: The Armageddon Hedge by our resident gold expert, Greg McCoach.That more than raises the question of whether or not this “recovery” is sustainable, since it takes 150,000 jobs to the plus side just to tread water.
Again, as I have noted before, it takes about 3% growth just to create enough jobs to keep pace with the increasing population. What's more, even at 5% growth rates for a year, the unemployment rate would only drop 1%.
Meanwhile, the sad reality is that we are no where near these benchmarks as the “V-shaped” recovery crowd still tries to earn their wings.
Personally, I think they are trying to float a lead balloon. Why? Because it's all about the U.S. consumer, stupid.
When these folks don't have jobs (there's that word again), they don't spend enough money to keep it all afloat.
And after 20 years of running up the credit cards, consumers have basically reached the exhaustion point — like a horse that's been ridden too far, too fast, for far too long.
And since 70% of U.S. GDP revolves around people buying stuff, that makes it nearly impossible to grow the economy out of this mess.
That's why yesterday's awful retail sales numbers sent futures plummeting across the board from the moment they were released.
According to the Commerce Department, retail sales plunged in May by the largest amount in eight months as consumers slashed spending on everything from cars to clothing. In total, spending fell a whopping 1.2% as even stores like Wal-Mart got the cold shoulder.
So when Ben Bernanke waxes poetic about how the economy won't fall into a double dip recession don't believe him. Remember, this is guy that had a hard time spotting the housing bubble.
In the meantime, for investors, “Sell in May” turned out to be the call as stocks suffered their worse monthly percentage losses since February 2009.
That's the bad news.
The good news is that from a contrarian perspective, the market sentiment is still too bearish — leaving the market oversold and primed for a short- to intermediate-term bounce.
For instance, the most dramatic sentiment change came last week from the AAII poll. According to the American Association on Individual Investors, the number of bulls fell to 30% from 41%, while the number of bears rose to 51% from 34% over the same time period.
That's a sign that too many investors have thrown in the towel and is the same kind of sentiment swing that many times marks a short-term bottom.
So don't be surprised if the markets mount a countertrend rally from here — even in the face of all of the lousy data.
As for places to play these trends, here are a few of best investment insights from the pages of this week's top-read articles in Wealth Daily and from our sister publications, Energy & Capital and Green Chip Stocks.
Good Investing,
Steve Christ
Editor, Wealth Daily
The Best Silver Stocks: Top 3 Silver Stocks in 2010
Wealth Daily Editor Luke Burgess gives investors details on the top three silver stocks beating the markets in 2010.
All About Gold: Say Hello to the Easiest Gains You'll Make this Summer
This one's for the books. Top metals investor Greg McCoach explains how one company's multi-billion dollar goof just created the easiest gains you'll make this summer.
Profit from Natural Gas Price Cycles: Playing Seasonal Shifts in Nat Gas for Profit
Publisher Brian Hicks explains why now is the time to buy natural gas and nat gas stocks as we head into the summer months.
BP Oil Spill Boosts Nuclear Power: Gulf Disaster Prompts Search for Alternatives
Wealth Daily's Steve Christ takes a look at the BP oil spill and explains why nuclear power will benefit in the long run.
Why $200 Oil is Closer Than You Think: Last Chance to Buy Oil Before the Bounce
Energy and Capital Editor Christian DeHaemer explains why artificially low oil prices are creating a last-chance profit window for investors.
The Shadow Inventory: Simple Ways to Profit from the Foreclosure Crisis
Editor Ian Cooper explains why 20 million properties will be foreclosed on 2012 and how three stocks could bring you riches from it all.
Investing in Algae-Based Biofuels: The Biofuel Game-Changer
Green Chip Editor Jeff Siegel discusses a game-changing development in the production of algae-based biofuel.
A Shift in the Global Wind Industry: Wind Companies to Adapt... or Die
Editor Nick Hodge chronicles current problems facing the wind industry, how they're being overcome, and where to look for profit.
Natural Gas Stocks: Back in Play? 3 Top Natural Gas Stocks
Energy and Capital Editor Keith Kohl explores three natural gas stocks for investors to play on a recovery.
Winning Biotech Investments: This Bull Market is Just Heating Up
Wealth Daily Editor Steve Christ discusses the biotech bull market and the one overlooked American company that just made your immune system 1,000 times more effective.
If he were to tell the truth, all the old sayings like "sell in May and go away"...."V-shaped recovery"....and "bull and bear markets" would lose their meanings.
What is the truth? The truth is that the FED has monetized federal debt into pure fiat money since 1971. The interest on this debt has been made a part of the subsequent year's budget deficit for decades, compounding the interest year after year. Finally, after forty years of such practice, the compounding of interest has put the USD into an unsalvagable position. It simply can no longer be saved, period.
In the meantime, the USD by the very size of the amount in circulation, exhibits a value which exceeds every other fiat currency. That is why U.S. debt paper is still desired. Will it continue into the future.....???
No, because the amount of interest on the debt is compounding so fast that the FED has to monetize trillions of USD. These trillions cannot come from budget deficits alone, though the Democrats are trying their best. The FED has to use the TARP legislation (FRA, Section 14 para (b))to monetize bank troubled assets to generate the trillions of USDs required. The Chinese and others who purchase U.S. Treasury paper don't like it, but as long as we promise to institute fiscal measures, they'll accept it up to a certain point.
As to the equity markets, they are influenced by the "Working Group".
The stock sell offs essentially take "cash currency" out which is then replaced with TARP "deposit currency" to keep the level above DOW 10,000. As to the bond markets, the FED keeps down the interest rates allowing the bond speculators to realize risk free profits.
As to the economy, recovery can only come from private capital investment. Government expenditures only move money around. Government money creates nothing. Yet in the present business climate, no investor in his right mind will invest his own valuable capital.
Therefore, Bernanke is wrong, as the article points out. What is happening is that any asset held in USDs will lose in value. To believe that there is a positive out come to our financial and economic woes is to believe in Santa Claus.
70% of the GDP is consumer spending, but it's been that way since WWII. The statement about it being impossible to grow out of this mess is wrong. It will be 70% of GDP whether GDP is trending up or down.
The problem is not that jobs are not increasing to keep up with the increasing population, it's that our population is getting OLDER. Same thing that happened in Japan and will happen in China (one child policy). The older you get, you spend less, save more. It's younger people that have children and spend $. Until the demographics trend upwards and the greater amount of our population starts spending, we are slowing as an Economy.