Mel's Blog

November 09 Market News #3

November 9th, 2009 3:20 PM by Mel Samick

The unemployment rate jumped over the moon to 10.2 percent during the month of October. Thus, sadly, an increasing number amongst us are denied the pleasure of crawling to work. Around 200,000 jobs were lost in the month of October alone as the Great Recession continues its march through the U.S. and the world economy. Interestingly, according to some news reports, companies are facing hard times in terms of finding and hiring the right person(s) for some job openings. Positions in sectors like health care and technology; and complex specialized jobs in several other sectors including finance and banking, remain unfilled. It is disheartening that such jobs are vacant due to a lack of candidates with the appropriate skills, particularly when there are millions of job-seekers in the market. Perhaps it is indicative of the talent drain from the U.S. that is ongoing as other countries around the world present more opportunities in today’s times. Oh, by the way, those of you who dream of becoming a CEO, you may try your luck at Bank of America which is yet to find a replacement for Mr. Kenneth Lewis. Good luck to you!

The good news, if one may call it that, for the unemployed is that the government, responding to this sober situation, has extended unemployment assistance for an additional 20 weeks. The Bill legislated last week also has a provision that allows companies to set off their current year losses against previous years' income. This has the potential to make loss-making companies look good on paper without altering the company's fundamentals. The government is betting that this provision will allow more time to nurse the economy back to health. One sincerely hopes that this bet pays off.

In a significant victory for the Obama administration, the House of Representatives, late Saturday night, narrowly approved a major overhaul of healthcare administration in the country. The issue has been championed by the Democrats for decades now and the President promised a bill addressing it during his election campaign. The passage of the healthcare Bill faced near-unanimous Republican ire, due to concerns about the long-term monetary costs and healthcare service levels. If this Bill becomes law, it would mark a paradigm shift in the social landscape of the U.S. -- just as passage of the Social Security Act did in 1935 and the Medicare Act did in 1965.

Meanwhile, the stock market appeared resurgent with the Dow ending the week above 10,000 points. The non-farm business productivity in the third quarter surged 9.5 percent on an annualized basis, the biggest gain since the third quarter of 2003. Factory orders for September gained 0.9 percent versus a 0.8 percent fall in August, while total inventories fell 1 percent. Despite the weak job report, U.S. indices gained approximately 3 percent for the week.

On the commodity front, precious metals led by gold moved steadily north with gold touching a landmark $1,100 an ounce. The IMF sold around 280 tons from its coffers, to India, for about $6 billion to replenish its funds. India, on her part, maintained that she was diversifying her holdings across a broader range of assets. The price hike in gold obtained sympathetic support from other base metals such as copper, nickel, lead and aluminum, which also rose in unison. Oil has hardened at the $80 per barrel level even as gasoline consumption in U.S. dropped significantly last summer.

The major focus for this coming week will be the Treasury auction sales, international trade balance and consumer sentiment reports.

                Mel

Information provided by Amtrust Bank Capital Markets

Posted in:General
Posted by Mel Samick on November 9th, 2009 3:20 PM

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