NEW YORK (CNNMoney) – “More people filed for their first week of unemployment benefits last week, signaling little improvement in the job market in August.
About 372,000 filed jobless claims in the week ended August 18, up 4,000 from the previous week, the Department of Labor said Thursday...This report is seen as a key predictor of monthly job creation in August...In July, the economy added 163,000 jobs , and the unemployment rate rose to 8.3%.”
http://money.cnn.com/2012/08/23/news/economy/unemployment-benefits/index.html
That isn't encouraging but it's not a disaster either. Not much change from the previous week.
FISCAL CLIFF (RANT)
There has been a lot of talk about the Fiscal Cliff, the double whammy of tax increases (due to the expiring Bush tax cuts) and across the board spending cuts of about 10%. These cuts were passed by both parties and signed into law by the President last fall.
To me this looks more like a fiscal speed-bump than a cliff. A 10% cut? That would reduce spending by $100-million this year. Excuse me...deficits are exceeding 1-trillion dollars per year. Why is this a crisis? It should be relatively painless to absorb a 10% cut in spending. Unfortunately, the Dems are all whining about how the poor and elderly will be hurt while the Repubs are all panicked by the big money industrial complex that is afraid their favorite jet fighter project might get scaled back or put off a few years.
One of the cuts would be extremely painful: CNN/Money - "Medicare payment rates for physician services drops by 27%." That is part of a law that undoes a prior law aimed at reducing Medicare costs. Of course, simply paying less for services doesn't solve any problem and forces Doctors to turn away Medicare patients. This one issue shows how difficult it is to solve our crisis in the Medicare system and this is at the heart of our deficit problem. In its present form, Medicare is hugely underfunded.
Regarding increased taxes, it is not at all clear to me that tax increases would hurt the economy either. Oh, I understand the theory - Uncle Sam sucks up more of the money so there is less spent and the economy goes down. I've always felt that taxes should go up in a recession so those of us with jobs could help those that don't have them, but everyone likes the Keynesian way...spend, spend, spend and run up the national debt. I will point out, again, that the Japanese have been deficit spending for 20-yrs and their economy and stock market are still a wreck and now they have wrecked their country with a debt to GDP ratio over 200%, highest in the developed world and third overall.
FISCAL CLIFF
Well, enough of my rants... here is an article from CNN/Money that offers information regarding the Fiscal Cliff so you can decide for yourself.
NEW YORK (CNNMoney) -- "If lawmakers cannot agree on how to address the pending 'fiscal cliff', $7 trillion worth of tax increases and spending cuts will begin to go into effect in January."
http://money.cnn.com/2012/08/06/news/economy/fiscal-cliff/index.htm
(7-trillion? That's over 10-years. I guess fear mongering sells newspapers, clicks, ads, or whatever.)
MARKET RECAP
Thursday the S&P 500 fell 0.8% to 1402
(rounded). VIX rose nearly 6% to 15.96.
The S&P 500 is now approaching the lower trend line
(more or less) so too much more downside (a few more percent) will be a significant concern.
NTSM
The NTSM analysis switched to HOLD at the
close on Thursday.
MY INVESTED POSITION
Based on the BUY signal, 6 July, I moved back
into the market on 9 July (after the weekend) at S&P 500 1352. I now have a
50% stock allocation overall. For my age, that is what most advisors recommend,
however, I am normally much more aggressive. I have less invested in stocks now
because there’s a lot of risk.
With so many indicators that I watch in
positive territory, I am considering moving back into the market to 100%
invested – a truly crazy, risky position, but I am a risk taker. I may wait for
a better buying opportunity or move in toward the end of the month since my
401k only allows 3-moves per month and the last move must be “all-out”. Moving
in at the end of the month of August leaves more options for September.
