Yesterday, the Challenger jobs report showed more jobs were lost in July than expected. It wasn’t a big miss, but it was a miss. And after buyers stepped in early, the market’s reaction wasn’t a big one, either. By the end of the day, the Dow Industrials lost 30-some points.
I’ve been pointing out how the market just doesn’t seem to have much downside. Yesterday’s job loss news wasn’t a disaster, but it wasn’t good. But investors stepped in and pushed stocks well off their lows.
The Fed has made money cheap, and it’s going into the stock market. There’s been a lot of talk that there’s a stock market bubble in China because investors there are putting money from government stimulus efforts into the stock market. Nobody’s saying that about the U.S. stock market, but that is what’s happening.
This is the "false trend" I was referring to with the George Soros quote from the other day. We should understand that this trend will most likely be proved false at some point. The question is, when?
*****Today, jobless claims came in lower than expected. That’s going to put stocks on better footing. Of course, continuing claims rose. But investors are having the sense that the U.S. economy is stabilizing, so they are buying stocks.
In my Recovery Portfolio, I’m about to lock in a virtually risk-free 14% gain on drug maker Wyeth (NYSE:WYE). Pfizer (NYSE:PFE) announced that it would acquire Wyeth on January 6 in cash and stock deal. I bought Wyeth when Pfizer stock was low. My purchase price was essentially locked in by the acquisition terms. There was nothing but upside. And as Pfizer has recovered along with the market, my investment in Wyeth has done well.
If you’d like to learn about the "aggressive approach to conservative investing" that’s driving my Recovery Portfolio, please click here.
*****Cisco (Nasdaq:CSCO) CEO John Chambers is one of the best CEOs there are. He’s a straight-shooter, telling investors "…not to get too far ahead of themselves…" concerning Cisco’s earnings report and forecast.
In a nutshell, the last quarter was pretty good for Cisco, but the company still faces challenges. His advice is valid for all investors. Just check the retail sales data out this morning. The economy may be stabilizing, but retail is experiencing challenges. Sales were down around 5% across the board. And that trend has been in place for months.
Let’s not get too far ahead of ourselves.
******Treasury Secretary Timothy Geithner claims the government made a 23% profit on its bailout of Goldman Sachs (NYSE:GS). Now, Morgan Stanley is about to buy back a warrant it sold the government for $950 million.
There’s no word what the government’s profit is on this, but there should be no doubt that there is one. And that’s how it should be, so far as I’m concerned.
If these banks need money, the government shouldn’t be a lender of last resort. It’s an investor, and should be rewarded. And don’t forget, favorable government policies are allowing banks to profit. So again, the government should be rewarded for the risk it takes.
*****Yesterday, my first monthly column appeared in The Burlington Free Press, the daily newspaper in the state of Vermont. The first column is Investing in Vermont: Profits await clean energy investors. In this column I discuss investing in the clean energy sector, and offer readers three ideas – including two mutual funds and one ETF. You can read the column by clicking here.
*****The Managed America web video conference is coming up next Monday, August 10 at 6:00 P.M. It’s free to attend and you can register right now. Click here to register for this free online event.
P.S. Don’t forget that with tomorrow’s edition we’ll once again bring back Jason Cimpl, lead technical analyst from TradeMaster Daily Stock Alerts to give you his assessment on the market and his call for next week’s trades. You can catch a replay of last Friday’s video: click here.