What Will the Fed Do?

What’s this? New unemployment claims actually fell for a
week? Amazing…

Of course, a drop from 500,000 to 473,000 new claims for
unemployment benefits isn’t a very big move. And people are still losing jobs
at an alarming rate for an economy that’s supposedly in recovery. But at this
point, any improvement is a good thing. And we can only hope this is the
start of a trend toward better employment data.

If we look at unemployment on the state level, we see that
much of the unemployment is concentrated.
has an unemployment rate of 14.3%. Michigan
is at 13.1% and California
is at 12.3%. Florida comes in at

On the other hand, North
has an unemployment rate of just
South Dakota comes in at 4.4% and
Nebraska stands at 4.7%.

In total, 25 states have unemployment rates lower than the
national average. Only 7 states are higher.

One thing we notice is that unemployment is highest in
states that had the worst housing bubbles. States that have natural resources
to exploit (ie: oil, natural gas) come in at the low end of the national

This isn’t exactly a surprise. And I would argue that it’s a
trend that probably won’t reverse anytime soon. Sure, we’d all like to live
on the beach in
Florida or in a scenic
area of
California. But states that have industry
that’s not dependent on consumer spending (
Colorado, Wyoming, Oklahoma, etc.) appear to be better able
to support standards of living.

The “double-dip recession”
talk is reaching a crescendo. And it’s no surprise, given
recent economic data. In what will almost certainly be a disappointing
report, we get the second look at Q2
Earlier estimates were that the economy grew at a 2.4% clip. Not many are
feeling that optimistic now. A number around 1.3% to 1.4% is more likely.

It’s tough to say whether an in-line number will be greeted
positively by investors. After all, things clearly could be worse. But at the
same time, this little “soft-patch” has been unnerving. Especially because it
seems to have taken the Fed by surprise.

Speaking ofthe Fed,
it’s off on its annual boondoggle to
, Wyoming.
If there was ever a time to hold this conference somewhere a little less
ostentatious, this was the year, but I digress.

Bernanke gives a keynote speech on Friday and many investors
expect him to announce some new stimulus plans.

Many commentators have said there’s not much the Fed can do
at this point. And it’s easy to see the difficulty of trying to keep interest
rates low and at the same time, encourage the velocity of money.

The Fed’s latest move to keep rates down prompted a massive
spike in bond prices. Now, in order to drive money out of bonds and into
riskier (and more profitable) investments, interest rates will almost
certainly have to rise.

That will be quite a juggling act by the Fed.

In thelast two
Daily Stock Alerts
members closed 4
positions for profits. Trading strategist
Jason Cimpl
saw the latest move lower coming, and his readers picked up
7%, 7.1%, 7.2% and 4.7% gains on some inverse ETFs.

I don’t mean to sound like a broken record here, but Jason
has kept his readers profiting from all of the stock market’s moves. These
days, that’s a valuable skill.

Right now, Jason has sights set on a company that he thinks
could double in the near future. But if you’re interested, you should act
quickly. The stock is already moving higher today. Click
HERE for more details about
Daily Stock Alerts
can keep you
profiting, no matter which way the stock market heads.

Also, so you know, Jason suspects that the Barclay’s 20+
Treasury Bond Fund (NYSE: TLT) may have topped out

As always, please send me your comments and questions:
[email protected]

To top