“Employers added 252,000 jobs in December…somewhat stronger than economists’ forecast…The unemployment rate, which is drawn from a different survey of households, moved down to 5.6%, the lowest level since the recession…” Story at…
http://www.forbes.com/sites/samanthasharf/2015/01/09/jobs-report-u-s-economy-added-252000-jobs-in-december-unemployment-down-to-5-6/
AVERAGE WORKWEEK
Unchanged at 34.6 hours.
HOURLY EARNINGS (Washington Post)
“Hourly earnings were one of the not-good parts of Friday's jobs report, which otherwise showed increases in new jobs and a decrease in the unemployment rate. But hourly earnings -- a.k.a. wages -- fell a bit.” Story at…
http://www.washingtonpost.com/blogs/the-fix/wp/2015/01/09/unemployment-and-the-stock-market-are-improving-but-what-about-wages/
Hourly wages decreased by 5-cents or 2-tenths of 1%. While this is being reported as unfair and some sort of disaster, with inflation at extremely low levels (some are suggesting the US is experiencing deflation due to oil decreases), I wouldn’t expect businesses to increase employee wages. As workers feel more confident in the economy and job-growth continues, workers will demand (and receive) higher wages as employers compete for workers. This process is a major driver of inflation. The scary part here is that Government is stepping in to force higher wages thru legislation. This distorts the market and is likely to have unintended consequences. On a positive note…
Doug Short notes, adjusted for inflation, the 5-cent drop in hourly earnings is actually a penny increase. For a detailed analysis see Advisor Perspectives at…
http://www.advisorperspectives.com/dshort/updates/Employment-Wages-and-Hours.php
GOVERNMENT EMPLOYEES STOCK ALLOCATION
The Government’s 401k program (TSP) wasn’t too good under the Civil Service Retirement System. The Government didn’t match employee contributions and choices for investment were limited. There are really only 2-strong points: (1) The funds are extremely low cost (2) The money-market fund (“G”-fund) pays nearly a 2.4% risk-free yield vs. the average commercial money market fund that pays essentially zero interest. Government employees, therefore, should fully invest non-TSP funds in stocks and hold their cash portion of an overall investment portfolio in the TSP to maximize returns. Also, losses can’t be deducted in the TSP and that’s another reason to limit risk in the TSP. That doesn’t mean don’t invest in stocks in the TSP (C, S, or I), just maximize stock exposure in non-TSP funds when you can. If you only have TSP investments, then maximize stock allocation to the extent you are comfortable.
Of course, always keep emergency funds to cover a few months of expenses available in cash in easily accessed accounts.
TERRORISM CONVICTION (Reuters)
“Radical imam Abu Hamza al-Masri was sentenced to life in prison on Friday, eight months after he was convicted of federal terrorism charges in New York.” Story at…
http://www.reuters.com/article/2015/01/09/us-usa-security-imam-sentencing-idUSKBN0KI1V620150109
MARKET REPORT
-Friday, the S&P 500 was down about 0.8% to 2045 (rounded).
-VIX was up about 4% to 17.7.
-The yield on the 10-year Treasury Note fell to 1.96%.
One never knows for sure whether today’s down day is normal profit taking or the start of a down turn; but, one can say that after a nearly 3% move up over 2-days, a drop of 0.8% Friday is entirely normal and nothing to be overly concerned about.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 52% at the close Friday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +94. (It was +198 Thursday). The 10-day moving average of change in the spread was down slightly to minus-9. In other words, over the last 10-days, on average, the spread has DECREASED by 9-each day. (That stat is skewed negative by the decline that occurred before the recent 2-huge up-days.)
Internals are neutral on the market.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late. They are most useful when they diverge from
the Index. In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).
Of course, few trend-following systems will do well in an extreme
low-volatility, straight-up year like 2013.
NTSM
Friday, the long-term NTSM system analysis remained HOLD. The VIX indicator is negative; VOLUME is positive; other indicators are neutral.
I remain fully invested at 50% invested in stocks. 50% is conservative, but appropriate for a retired guy. I have been a buyer early this week in my trading portfolio.
