Financial Markets Wrap - US Economy, and Stock Market

By: Douglas_V_Gnazzo

Economy
The U.S. Department of Labor reported that nonfarm payroll employment edged up +88,000 in April, and the unemployment rate was unchanged at 4.5%.

There were jobs added in several service-providing industries, including health care and food services, while employment declined in retail trade and manufacturing .

So far in 2007 monthly payroll employment gains have averaged 129,000 compared with average increases of 189,000 per month in 2006.

For the month of April the number of unemployed people stayed the same (6.8 million) and the unemployment rate (4.5%) remain unchanged as well. Since September 2006 the jobless rate has averaged 4.4 to 4.6 percent.

Manufacturing employment continued to decline in April - down 19,000. There were small job losses across the manufacturing industry, with significant declines in machinery (-5,000), motor vehicles (-5,000), and textile mills (-3,000).

The manufacturing workweek and factory overtime each fell by 0.1 hour to 41.1 and 4.2 hours, respectively.

Average weekly earnings edged down by 0.1 percent over the month to $583.05. Over the year, average hourly and weekly earnings grew by 3.7 and 3.4 percent, respectively.

In the 12 months ended in March, productivity rose 1.1 percent, down from a 1.6 percent year-over-year gain the previous quarter. Labor costs rose 1.3 percent from March 2006, compared with a 3.4 percent increase in the 12 months through December.

Compensation for each hour worked rose at an annual rate of 2.3 percent in the first quarter, compared with an 8.5 percent gain in the prior three months.

The Institute for Supply Management released its ISM Manufacturing index, which rose to 54.7 in April, the highest reading in 11 months.

The Commerce Department reported that factory orders rose 3.1% in March.

And You Thought Your Job Is a Pain

Summary

Stock markets around the world continue to float upwards on a sea of paper fiat debt-money that has inundated the world. How long will it continue - until it doesn't?

In April corporate buy back totals set a record of $154.1 billion, which is equal to 0.74% of the total market cap of all US stocks.

The Fed once again has its coveted inverted yield curve. Once again we say - how long can this go on?

The debacle in the US subprime mortgage market is long from over. This past week saw first-quarter earnings expose further mortgage-related losses at GMAC, Swiss Bank, and UBS. There will be more - much more, which is why we keep saying that any surprises in interest rates will be to the upside.

Since with think that any surprises in interest rates will be to the upside, we also think that any surprises in the bond market will be to the downside. We note that either the dollar goes down and bonds go up, or bonds go down and the dollar goes up. And of course both could go down together.

The dollar is the equivalent to the walking dead, but it may have a short covering rally at any time - one which could be short lived, although violently powerful short term. Which coincides with our outlook in the precious metals arena.

Gold and the U.S. dollar are not joined at the hip, however, they do over time tend to move to the inverse of one another. We do not believe that weakness in the dollar causes the price of gold to go up per se, nor that strength in gold makes the dollar go down.

What is of importance is the perceived future expectations of the dollar retaining or losing its purchasing power. If expectations rise then gold will react accordingly by rising as well.

Presently there is a large short position in the dollar. This could cause a short covering rally if the dollar begins to turn up. Last week the dollar started to rise, but Friday's unemployment report put a quick stop to that.

Invitation

Stop by our website and check out the complete +30 page market wrap, which covers most of the major markets, including stocks, bonds, currencies, commodities, and the precious metals.

There is also a lot of information on gold and silver, not only from an investment point of view, but also from its position as being the mandated monetary system of our Constitution - Silver and Gold Coins as in Honest Weights and Measures.

There is also a live bulletin board where you can discuss the markets with people from around the world and many other resources too numerous to list. Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.

Douglas V. Gnazzo
Honest Money Gold & Silver Report

Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).

Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.

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