The market had a very nice run-up the first week of January. This is pent-up demand after the 5 week stagnation in December. However, it must be remembered that the economy is not doing well at all. Drive around - there's a huge amount of empty commercial real estate, unemployment remains very high, consumer spending is way down. We're living on stimulus money and zero-interest Fed loans, which is like sitting around for three days without sleep drinking coffee and eating Snickers and saying "I'm not tired at all."
Unemployment figures came in for December, we lost 88,000 jobs, after a November where in the revised numbers we basically didn't lose any jobs at all. We must remember, however, that the goal is not zero lost jobs: the US has a large population of 18 year olds, we must make about 100,000 new jobs a month just to tread water. Zero jobs lost mean unemployment is going up by 100,000 per month. This summer the Census bureau will be hiring about 250,000 temporary workers to do the 2010 census, which is going to make unemployment figures look really good for the summer, with a guaranteed hangover in the fall.
In the third quarter state tax receipts fell 7% in Q3 from a year ago. Sales taxes are down 9% and income taxes off 12%. If retail sales are up, how come sales tax receipts are down? Books are being cooked. . .
China’s currency is pegged by official policy at about 6.8 Yuan to the dollar. At this exchange rate, Chinese manufacturing has a large cost advantage over its rivals, leading to huge trade surpluses. Under normal circumstances, the inflow of dollars from those surpluses would push up the value of China’s currency, unless it was offset by private investors heading the other way. And private investors are trying to get into China, not out of it. But China’s government restricts capital inflows, even as it buys up dollars and parks them abroad, adding to a $2 trillion-plus hoard of foreign exchange reserves. Why do they do this? By keeping exchange rates low, China is pricing their workers low and moving about 1,400,000 jobs from the US to China. You may expect that this will become an issue later this year when US unemployment fails to come down, with Democrats screaming for trade barriers.
Senate Democratic leader Harry Reid apologized on Saturday for saying a year ago that Barack Obama should seek and could win the White House because Obama was "light skinned with no Negro dialect." OK, I guess I must be a racist pig, 'cause I thought the same thing. Along with most of America, I think. How is it that we've come to a place where we can't speak what everybody thinks? Here's what I think: he's a handsome guy, an incredible orator, has remarkable emotional control, and is a minority guy that looks, talks and behaves in a fashion that's non-threatening to us white folks - in short, a dream candidate. And unlike Reid, I'm not going to apologize for saying that.