GOOD JOBS DATA?

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Here is an important article (Martin Weiss/SafeMoneyReport) Great job news ... right? Not really
03/04

The stock market took off like a rocket this morning on a strong February jobs report (more below) and easily eclipsed those old overhead resistance levels and hit numbers not seen since June 2001.

After shooting out of the gate, the Dow Jones spent the rest of the morning and early afternoon hovering around the 10,900 area. The cheerleaders on CNBC couldn't talk enough about Dow 11,000 and did their best to help send the bulls off to a happy weekend.

Even though the market closes well off its intra-day highs, it was able to hold on to a triple-digit gain. The Dow Jones was up 107 points to 10,940. Heck, the bulls even shook off another increase in oil as the barrel price edged up by 21 cents to $53.76.
Several sectors were able to move up by more than 2% today. Airlines, precious metals, and brokerage stocks were the big winners of the day. In what could be an interesting development, the bond market was able to put together a gain today, too.
Bond investors interpreted the uptick in the unemployment rate to indicate a slowing economy. Of course, either the bond investors or the bulls have to be wrong. For the time being, I'd have to defer to the bulls.

For anyone that cares, I am still "long" the market and anticipate the market to go even higher ... but not for much longer. I have a clear exit strategy and I urge anybody else that is heavily invested in the stock market to do the same. This party won't last forever and when it does end, the hangover is going to really, really hurt.

Great job news ... right?
Not really The big news of the day came from the Labor Department, which reported that our economy created 262,000 new jobs in the month of February. That number was significantly higher than the 221,000 the Wall Street gang was counting on. The bulls, of course, used that news to plow full-steam ahead into the stock market. I shouldn't be surprised, but the bulls and mainstream media missed all the details in the jobs report and completely ignored the most important facts. What facts? I'm glad you asked.

The unemployment rate jumped from 5.2% to 5.4%. If the job picture is so good, why is the unemployment number rising? The reason is that the Labor Department's phony-baloney "birth/death" model that tries to estimate the number of new jobs is — as usual — way too optimistic.
The number of unemployed Americans rose by 251,000 in February to 7.99 million. If our economy is creating all these jobs, why is the number of Americans out of work increasing?

Nobody paid any attention to the news that the number of new jobs created in January was revised downward from 146,000 to 132,000.
The jobs our economy is creating are somewhere between lousy to mediocre. Of those 262,000 new jobs, 207,000 of them were service jobs, such as retail and temp jobs.

The average hourly earnings were unchanged for the month at $15.90. In the last 12 months, wages have only grown by 2.5%.
The average workweek was steady at 33.7 hours. When the economy is healthy and improving, that number should to rise.

The labor force participation was unchanged at 65.8% — the lowest participation rate since 1988. The jobs situation isn't awful, but it sure isn't the pop-the-champagne party that the bulls think it is. As always, the reaction to the news is more important than the news itself and today's reaction shows that the bulls are still in control.

Wall Street has zero caution. Consumers have lots of it The University of Michigan consumer sentiment survey showed a drop from 95.5 in January to 94.1 in late February. It is also the third monthly decline in a row.

A drop in consumer confidence makes perfect sense to me. As the Labor Department report above shows, wages are barely rising (up 2.5% in the last 12 months). At the same time, the Fed has raised the cost of borrowing money by raising interest rate six times.

And the cost of energy (gas, heating, natural gas) is skyrocketing along with other commodities like milk, cheese, meat, juicy, and coffee. The combination of stagnant income and rising expenses is putting a squeeze on consumers. The only — and I mean only — thing keeping consumer confidence from getting flushed down the toilet has been rising real estate prices.
You feel pretty good when you see the value of your house increase by $50,000. If the real estate market cools down, consumer confidence and consumer spending are going to fall off a cliff.

The February issue of Safe Money shows you why the real estate bubble is about to burst, and this month's issue — just posted today — shows you how to potentially profit from the current commodities boom.

Surging gas prices around the corner We haven't hit the peak travel season yet, but the price of gasoline is about to take off and will very likely hit new all-time highs.
The average price for self-serve gas is currently $1.92 a gallon, which is only 13 cents below the all-time record high hit last May. Based upon $53 a barrel prices, a big hike is right around the corner.
With the recent jump in crude prices, "Retail gasoline has some 25 to 28 cents a gallon in increases ahead just to catch up to what has happened with wholesale since Christmas week," warned Tom Kloza of the Oil Price Information Service.

The experts at AAA agree. "All of the dynamics are in place for U.S. motorists to pay new record high prices again this year," said Geoff Sundstrom of AAA. Are the bulls worried? Not a chance. I even heard one expert on CNBC today say that oil won't be a problem until it hits $60 a barrel.
Every extra dollar that goes into a gas tank is a dollar that can't be spent on a new car, a new home, or new clothes.

The bulls may not want to believe it or just plain ignore it, higher energy prices are a problem today.
Hard drive maker shuts one factory Maxtor makes hard drives for computers. Apparently, the hard drive business isn't so good. Maxtor announced today that it would close one of its two Singapore plants and eliminate 5,500 jobs. Wall Street is surprised, but I'm not. Last month, Maxtor reported a Q4 loss that was twice as large as Wall Street was expecting and admitted that it would very likely lose money in Q1, too. Yeah, it sure sounds like the management at Maxtor expects the PC business to take off any day now (sarcasm).

For those of you bothering to connect the dots, Maxtor's largest customers include Dell, Hewlett Packard, Fujitsu-Siemens, and IBM.

MAXTOR NEWS