Why Jobs are Really Leaving America
The White House was quick to cheer the rosy employment numbers from the Labor Department earlier this month. And the market responded with a rally. But something doesn't add up.
Big Banks Spur Another Big Rally
This week's data may not indicate too much about the U.S. economic recovery, but it was good enough to support bank stocks...
Europe Talks Come Down to the Wire
Financials have clearly driven this rally. And it makes sense - this rally is being built on a bailout designed to help banks.
Who is Responsible?
Will Obama's Jobs Plan Work?
The market did not do much yesterday. The indices started the day moving higher, but around noon they fell back and closed in the red.
The decline was entirely expected and needed. Many indices had moved up 6% in two days, so it was natural that they consolidated yesterday, especially with no news.
50% Chance of Recession
What Gold and Silver Can Tell Us About Job Creation
S&P, You've Got To Be Kidding
"S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties," the article says.
S&P seems to have forgotten that these mortgage-backed securities defaulted to the point that it nearly brought the world's financial system down. Of course, banks held too many of them, and had leveraged them too much, but S&P was complicit.
But, I guess when you're getting paid -- approximately $1.67 billion in bond rating fees last year -- anything goes.
Stocks Get Crushed
That's right it actually cost you a fraction of a penny to exchange your cash for shares of a money-market fund. And money-market funds are more similar to the dollar than any other the asset in the world.
Treasury bonds did pretty well, too. The iShares Barclays 20+ Year Treasury Bond ETF (TLT) was up 3.5% to $105. It's rallied 10% since July 25. Demand for Treasuries is high, investors aren't just fleeing risk. It's more like a stampede. Not coincidentally, the S&P 500 is down 10% in over the exact same period of time.
Here's Why You Shouldn’t Panic After the Big Decline
Declining stocks to advancing stocks were about 19 to 1. Down volume to up volume (some of which was us) was an incredible and jaw dropping 1.8 billion to 20 million.
Going into the day, I expected a nice leisurely decline to Monday's low, then stabilization, maybe even a bounce back to 1280. I figured the indices were oversold, and near a reliable support zone. Wrong.
Big Banks Report Big Profits
The indices overseas were mostly lower today, although Europe got a slight pop after JPMorgan (NYSE: JPM) second quarter earnings were announced this morning. JPM stock was also up 3% following that news. The mega U.S. bank once again beat estimates and grew profits. JPMorgan reported $5.4 billion in income or $1.27 per share in the second quarter. That compares with earnings of $1.09 one year ago.
QE3 QE3 QE3 QE3
I continue to view the action of the past couple days as consolidation. And until 1301 is taken by the bears I firmly expect new highs in all market indices.
Yesterday the minutes of the last FOMC meeting were released and QE3 was on the agenda. While nothing formal was announced by the FOMC, the group claimed to be open to another round of easing if warranted by slow economic growth and mild employment growth.
Employment Shock: The Market Declines for WIR
Financials were a big part of the rally, which was great to see because that sector has certainly slumped behind over the past three months.
The big banks popped yesterday after a better than expect ADP jobs number was announced.
JPMorgan (NYSE: JPM), Bank of America (NYSE: BAC), Citi (NYSE: C) and Wells Fargo (NYSE: WFC) rallied 1.7% from that news. The ADP reported that in June 157,000 private jobs were added, which was ahead of the 70,000 widely expected and the 36,000 in May.
What Intel’s Forecast Means (INTC, F, CAT)
There is a budding divergence between economic data and corporate forecasts. We’ve seen a stark deterioration of economic data across the board. Manufacturing surveys have weakened, auto sales were down in May and then, of course, we got the icing on the cake with the pitiful employment numbers last week.
Economists and strategists have been falling all over each other as they lower their 2011 GDP estimates. (Of course, Daily Profit readers had a heads up, as we noted the change in the Fed’s outlook after the last FOMC meeting.)
Should We Blame Speculators for Higher Commodity Prices? (GS)
My belief as a researcher and an analyst is that undue speculation in not just the copper market - but nearly every market, including the stock market, currency markets, the bond market, etc. - my belief is that this speculation is being fueled predominately if not completely by the actions of the Federal Reserve.
The Fed has a mandate, for better or worse, constitutionally or unconstitutionally, to maximize employment and keep GDP growth slow and steady. And now we're seeing the breadth of their power to implement those two goals - they can simply transfer "dollars" from out of thin air into the bond market, into the financial system, into the mortgage market. Those dollars have to go somewhere. Goldman Sachs (NYSE: GS) isn't likely to sit on billions of dollars - they'll put it to work speculating. The same is true of all of the Fed's member banks.
As we saw with the oil markets between 2008 and 2010, when the bets turn against the speculators, the price tends to drop to ridiculous lows. Looking at a copper chart, the same thing happened there too.
New Unemployment Claims Fall
And today, New Unemployment Claims finally broke through the critical 400,000 level for the first time in 2 ½ years.
Two Trends to Watch
The weak economic recovery has created a very volatile stock market. Wide swings in investor sentiment give us "it's getting better" rallies and "double-dip recession" sell-offs.
We've enjoyed one of those "it's getting better" rallies that's boosted the S&P 500 85 points, or 8%, from 1,040 on August 31 to a 1,125 close yesterday. The move was supported by improving employment data, better than expected retail sales and spending numbers and as surprise jump in manufacturing activity.
But these days, investors don't maintain their convictions, or stock positions, for long. And economic data is having a hard time building on its momentum.
Bullet-Proof
The stock market rally that started on
Now, we are not surprised. I’ve been relentlessly bullish here in Daily Profit. Sure, I may point out some discrepancies once in a while, maybe even shoot a few holes in the financial media’s neat and tidy explanations, but I’ve had us focused on upside targets for a year now, and there’s one main reason: earnings.
This time last year, it was brutally obvious that analysts were seriously underestimating the earnings potential for bank stocks, even after the government changed the accounting rules to encourage profitability.
And in subsequent months, analysts continued to lowball earnings estimates. Companies kept beating them, and the market kept rallying.
Oil Pushes Higher
Few numbers have been released with as much fanfare and anticipation as last Friday’s Nonfarm Payrolls number. Is it any wonder that the number was pretty good? Are we surprised that economists across the board are hailing the addition of 162,000 jobs in March as definitive evidence that the economic recovery is picking up steam?
Employment increased at the fastest rate since March 2007. And it wasn’t all Census workers, either. Government hiring accounted for 39,000 workers. That means private companies hired 123,000 people.
Employment numbers will continue to look good, as Census hiring will continue into June. But we’re going to need to see continued solid growth from private sector employment.
On Assignment: Answering the call
Rather than trying to find work for everyone - including manufacturing or manual labor that Manpower Inc. (NYSE:MAN) and others provide - On Assignment has chosen to aim higher. It focuses on specialty skills for short-term and sometimes permanent assignments in health care, including physicians and nurses, life sciences and clinical research, engineering and IT staffing. It has just a smattering of international operations.
Founded in 1985, the Calabasas, Calif., company has 60 branches in the United States. On Assignment went public 16 years ago.
Of the five analysts surveyed by Thomson Reuters, two have On Assignment rated "strong buy," two call it a "buy," with the other ranking "hold." The median price target is $11.50 - just above the 52-week high of $11.42, hit on Aug. 22. On Assignment dropped to $4.32 on Jan. 24, but closed Friday at $9.27, down from its recent highs but up roughly one-third year-to-date.
"The overall job market has not been good for a while, but On Assignment has been squeaking out some improvement each quarter," said Tobey Sommer, a SunTrust Robinson Humphrey analyst who rates the stock a "buy," in an interview.
For the quarter ended June 30, On Assignment beat analysts' expectations, as revenue increased 8.5% to $156.1 million, and net income more than doubled to . . .


















