DOMESTIC EQUITY INDICES WERE up for the week, following a batch of positive economic reports, and in spite of hiring softness. By the numbers, for the week ended Friday, December 3, 2010, the Dow Jones Industrial Average closed at 11,382, up 290 points, or 2.6%. The S&P 500 closed at 1224, up 35 points, or 2.9%, and the NASDAQ Composite closed at 2591, up 57 points, or 2.2%.
On the economic front, nonfarm payrolls grew by 39,000 jobs in November, substantially less than the 155,000 forecast, sending the official unemployment rate from 9.6% in October to 9.8% in November. Construction spending gained 0.7% in October, fueled primarily by stimulus financed projects, and reminiscent of the WPA days. Manufacturing activity expanded for the 16th straight month, with auto sales leading the charge. Consumer confidence is at its highest level since June, and productivity growth was revised upward for the third quarter from 1.9% to 2.3%.
The U.S. continues to lose manufacturing jobs, as skilled labor and government services have both priced themselves out of the global market. In some of the best economic news in a long time, local governments reduced unemployment during October by 14,000 jobs. While this is a small start, it is a large step in the right direction.
On the tax front, Congress and the White House are attempting to come to terms on a tax bill before year end. Look for a special year-end tax update from us, delivered to your inbox by the 15th of December.
The European Union agreed to a $112 billion bailout of Ireland over the weekend. We will be surprised if the EU survives in its current form for another five years. Germany and its work ethic will agree to carry the rest of Europe only so long, and I suspect Germany is nearing the end of the line with its neighbors.
China is attempting to figure out what to do with its new found power. The current announcements are a tightening of the money supply and the importation of gold. It will be interesting to see if the old Communist lions can transition to their version of a capitalist economy or free market in a manner that allows them to sustain their current growth rates.
In China’s favor is a large and growing underground church, whose presence and impact is missed completely by almost all political and economic analysts and commentators. It is my understanding that China now leads the world in the number of Christian missionaries sent to other countries, surpassing both the U.S., and South Korea.
Cody Willard is suggesting that Apple stock will trade at $1000 a share by 2015. Pepsi has announced plans to purchase 66% of Russia’s Wimm-Bill-Dann foods, in a continuing effort to expand its global footprint.
Uncertainty is always with us. Often, it is masked behind what we see as good times. One approach to life is to separate our view of good and bad times from macro or micro economic circumstances. This is easier said than done, but it can be a useful exercise.
Quotes of the week:
“Alexander Hamilton started the U.S. Treasury with nothing, and that was the closest our country has been to being even.”
“I don’t make jokes. I just watch the government and report the facts.”
-Both quotes courtesy of Will Rogers
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