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Goldata Financial
Dedicated to above average returns in the stock market.
STOCK MARKET COMMENTARY
November 9, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata
Financial
Last week, the market continued its meandering ways. The gains of this past
week were smaller than the losses of the previous week and we should expect
this type of “hurry up and wait” behavior over the near term. The
bulls got the best of it through some good fundamental news including
Ford’s (F) and Cisco’s (CSCO) earnings beat and Berkshire
Hathaway’s (BRK) bid for Burlington Northern (BNI). Productivity
numbers were off the charts with 9+% reading for the third quarter (3-4% is
considered good). It’s not that magically our work force is producing
more with the same workforce, but Friday’s 10.2% reported unemployment
rate shows that our workforce can produce the same amount with fewer workers.
Historically, this trend has not continued as managers become more confident
of demand for their products and start to hire to meet anticipated future demand.
This time, uncertainty about the cost of hiring an additional worker (health
care, taxes) should put a damper on hiring and lengthen recovery time (a/k/a
the jobless recovery). Politically, the news was bullish as defeats for the Dems in the governor’s races of New Jersey and
Virginia was interpreted as the beginning of a move away from the bigger
government solutions of the current administration. The Fed met this past week
to decide on policy going forward and continued their stance of no increases
in interest rates for the foreseeable future. This begs the question --- If
things are really getting better fundamentally, why keep rates so low? The
answer can only be that the Fed’s conclusion is that their liquidity
injections are the source of improvement and must continue to be applied. Along
this vein, the $8,000 homebuyer’s tax credit was extended through April
with a kicker of a $6,500 credit for buyers of $800,000 homes. If we’re
going to supplement an $800,000 home purchase, at least invite us over for
dinner to say thank you. Locally, Philadelphia is currently having a transit
strike and the sticking points are wages and benefits. It is reported that
the average transit worker currently makes $52,000 not including benefits. In
today’s employment reality, holding up the city’s commuters for
more is truly the definition of greed. Game plan: Continued volatility with
no net movement is expected over the near term. I’ll continue to
attempt to hit some “singles” as the market moves to and fro and
go for the fences later when the economy appears to be functioning on its own
momentum.
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