Friends
I hope everyone had a great New Year’s celebration. The stock market started the week with a bang, as we had a very nice move up on Monday, the first trading day of the year. The rest of the week has been somewhat muted as we waited for the unemployment number that was just released this morning. Expectations for a better than expected number grew all week, and by last night the consensus looked to be for non-farm payroll to increase by more than 180,000 jobs. Well, the number was a little disappointing on that front. The non-farm payroll increase was a somewhat meager 103,000 jobs. On the other hand, the unemployment rate dropped to 9.4%. Evidently, a lot of people just gave up looking for a job in December. Well, it was holiday season and there was shopping to do.
Seriously, though, the trend on job creation is definitely positive, but the pace is somewhat disappointing. We are surely but slowly growing the job force, but to obtain the GDP growth we need to climb out of our debt hole, we need the pace of job creation to pick up. The press may crow about the unemployment rate dropping, but if unemployed folks come back looking for jobs in January the number of counted unemployed will go back up.
The market reaction is somewhat muted in pre-market trading as futures seem to be down just slightly. Stocks have run into a rather stiff resistance level up around 1275 to 1280 on the S&P. Support looks to be around 1260 to 1262. It is amusing to see how fast all of the bullish strategist and commentators can turn negative as soon as we get a pullback of any sort. As we pointed out in our 1st quarter 2011 outlook, we are positive on stocks as we enter 2011, but are concerned about the vast number on analyst who agree with us. Nevertheless, in general the economy seems to be pushing forward and we are in the camp that the progress will continue aided by an improving global macro conditions.
Bonds still seem to be poised for trouble in 2011 as Treasury rates this week have been creeping up. We continue to be patient on bonds as we feel the 30 year bull market has just begun to unravel.
You should have received our 1st quarter 2011 outlook via e-mail this week, and you will receive a hard copy with your quarterly summary statement this month. For those of you who are not yet clients of ours, feel free to contact Carolyn Thornton at Carolyn@chjwealthmanagement.com to receive a copy.
Have a very nice weekend everyone.
