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A Million Jobs A Month May Revive The Price Of Gold



  • This is a weekly series focused on analyzing the previous week’s economic data releases.
  • The objective is to concentrate on leading indicators of economic activity to determine whether the economy is strengthening or weakening, and the rate of inflation is increasing or decreasing.
  • This week I will examine construction spending, the ISM and Markit manufacturing indices, consumer confidence, weekly unemployment claims, and the jobs report for March.
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As unemployment claims fall below one million per week, the number of new jobs being added back to the economy is on the cusp of rising above one million per month. As a result, the U.S. economy is starting to boom with the ink barely dry on the $1.9 trillion stimulus package that President Biden signed just a few weeks ago. Now the President is proposing another $2.2 trillion in a host of spending initiatives focused on transportation, electric vehicles, the electricity grid, broadband internet, clean water, carbon capture, housing, and education. If a revised version of this bill passes later this year, the economy will roar, but so will long-term interest rates and inflation. It is foolhardy to think that we can have record levels of growth without the higher rates and inflation that come with it. Inflation expectations are already at a decade high. This presents valuation headwinds for an S&P 500 index that just crossed above the 4,000 level at the end of last week, but it may also put wind back into the sails of gold.

Construction Spending

Winter weather slowed the pace of construction spending in February. Total spending fell 0.8% with residential down 0.2%, but still up 21.2% over the past year, while non-residential was off 1.3% and down 6.1% over the past year. I expect non-residential construction will pick up significantly in the year ahead once a revised version of the infrastructure spending bill is passed by Congress.

ISM Manufacturing Index

The Institute for Supply Management's Manufacturing Index rose for a tenth consecutive month to a 38-year high of 64.7% in March. New orders and production are extremely strong with the employment sub-index at a three-year high of 59.6%. The only thing holding the manufacturing sector back from even more robust numbers are raw materials and

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This article was written by

Lawrence Fuller profile picture

Lawrence Fuller has been managing portfolios for individual investors for 30 years, starting his career at Merrill Lynch in 1993 and working in the same capacity with several other Wall Street firms before realizing his long-term goal of complete independence when he founded Fuller Asset Management.

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Analyst’s Disclosure: I am/we are long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (20)

Optimism is too much right now.

Can say from ground level, there are millions of people content with not working, just sitting at home collecting unemployment and stimulus. They have ZERO interest in working. NONE.

The people that want to work will go back to work quickly, and we’re seeing that, but it shouldn’t surprise anyone if the unemployment numbers are bad a few months from now. There are less businesses, less jobs, and less people willing to work; it’s bad + bad + bad. But for now people look at a monthly number and rejoice in the stimulus temperature rain. It won’t last forever.
@DrewMcVay ,

"I made all my money by sitting. Did you hear me? By just sitting!" - Jesse Livermore
DKB2 profile picture
Jesse loved a bargain.
Recollect a story where he bought a house with a settled foundation resulting in sloped floors.
Jesse solved the problem by sawing the legs of the furniture so that everything appeared level.
Happy Trails...
@DKB2 , Jesse James also loved a bargain. He would relieve a train of all its gold at a five finger discount.
Bitcoin has ended gold.
@ShakeOilSalesman , Did gold disappear just like that?
@ShakeOilSalesman ...right...and fine wines have been replaced by light beer.
@pluton7 , Always drink beer out of a bottle when possible.
Hazy... profile picture
Texas might actually Fix ERCOT's mismanagement but Texas NATURAL GAS INFRASTRUCTURE as well... Federal Grants Available??? Big Biden infrastructure spending...
Will Texas finally adopt FEDERAL guidelines... ??? can't say
Senate BILL SB 3 would require all power generators, transmission lines, natural gas facilities and pipelines to make upgrades for extreme weather — a process known as weatherization. Most power generators and gas facilities were not equipped to handle temperatures that dipped into single digits last month...
@Hazy... , You must have suffered in that power outage. Just a few years before Houston was flooded.
Hazy... profile picture
@kimbillro I just think there must be something better... from the better built house (hurricanes, tornado, termites?) to a smart Grid... or the weatherproofing of the Natural Gas system? 2003 NE Blackout sent 55 million in the dark and 508 generators tripped at 265 power plants... Is the answer back-up power on those really Big Buildings? maybe it's just Boom and Bust... Man makes plans, and God laughs. 2003 was only 28,000 MW NY ieso? vs Texas was 70,000 MW... amazing; there must have been 100,000 MW knock-off in 2003??? The answer of course is Offshore Wind Power... vs winterizing? Running an extension cord for 10 or 20 miles offshore vs adding a few back-up generators? NE Reliability Council mentions Dual Fuel at Gas Power plants... just a small amount of Diesel fuel runs just fine with Gas Power during a total blackout. Even Florida has Dual Fuel at some Gas Power plants... it's called Redundancy or Reliability. Instead it becomes a Political Football...
@Hazy... , "...a Political Football..."

That reminds me I need to get to a Nevada casino and place some NFL football futures bets for early next year.
Also expect gold to recover.
Excellent data and commentary.
You said: "I expect we will continue to see more rotation between sectors that results in limited upside from current levels for the broad index"

I've been following you for a while, you expected the market to react to the Dec/Jan covid spike and it shrugged it off.

To me the "value" sector isn't looking that great a value at present valuations. So my question is, do you believe we'll see any kind of significant SPX correction? i.e. >10% ?
@dorkshoei , I think an SPX correction could happen very easily.
@kimbillro Yeah. I'm curious what Lawrence's opinion is. I've seen people claiming 32xx is possible. Even as low as 3000.
Lawrence Fuller profile picture
@dorkshoei The market clearly didn't react negatively to the pandemic, but parts of it did, the parts sensitive to the economic reopening. The rotation out of tech and into value sectors (financials, materials, industrials, energy) could limit upside in broad index just because tech is 25% of index. We had a 10% correction in the russell and nearly in the nasdaq 100. But no dice on sp500.

I also said over the past month that this year is looking more like 1999 to me than 2000. I think higher rates and inflation will take a toll on valuations in the second half of this year, especially if tax increases are coming.
Dey just keep blowing da bubbles. The Fed keeps printing $120 billion per week, and the Government keeps spending an extra $2 trillion on average every 3 months by passing stimulus and infrastructure bills.
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