6.52%, 9.2% and 0.95%


The stock market euphoria over the past two weeks has been used by the administration and media to promote the economic recovery of the United States. In last week’s trading session, the market has increased 5.43%.  So far this week, the market was up another 1.09%. Compare this with an annual return of 1% for a money market account (not including taxes). Part of this gain was due to the “good” news this week by ADP concerning job creation in the private sector.

Here is an excerpt from a Reuters’ report prior to the release of the government’s payroll report:

Analysts polled by Reuters last week expected nonfarm payrolls, due at 8:30 am ET, to have risen by 90,000. In May, employment rose by just 54,000. However, many
economists raised their forecasts following a stronger-than-expected reading on
U.S. private hiring Thursday, and they now expect gains of anywhere between 125,000
and 175,000.

Unemployment is seen holding steady at 9.1 percent.

This report was removed from their site after the government’s payroll report was released.

U.S. economy adds 18,000 jobs in June, government says. Unemployment rate rises to 9.2% from 9.1% in May.

Today’s report also revised April and May’s payroll figures down 44,000.  The unexpected rise in unemployment to 9.2% had an immediate reaction to the stock market futures: down 0.95%.  I suspect that the Federal Reserve’s POMO strategy will be in effect today.

For all of the financial experts who continue to warn against the upcoming collapse of gold (the green line):

The price of gold rose $12.40 on this news. However, the U.S. dollar still gained today against the world’s basket of currencies as the contagion in the European Union spread to Italy:

The euro came in for some heavy selling Friday as contagion concerns sparked back into life, with Italian bond yields rocketing and Italian bank shares sliding amid vague talk that Italy’s Economy Minister Giulio Tremonti is poised to resign.

David DeGerolamo

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