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MORE OMINOUS SIGNS by Charles Payne

Last week all the major indices were up 3.0% plus for the week after seesawing back and forth. The market didn't get what it wanted from the jobs report but there were just enough positives in the mix to provide cover for a rally until the next jobs report. There aren't a lot of potential landmines out there although big question marks about consumer spending stand out as something that could derail the rally. In addition to rationalizing and cherry-picking aspects of the jobs report the market is giddy over the fact the G20 is willing to continue to pour stimulus in an attempt to stabilize the global economy. Smart investors understand the longer term implication but also know the stock market is selfish and even as the script sees an apocalyptic ending its party time in the present.

The news out of the G20 is hitting the dollar like a sack of nickels (which they may have to call the dollar after a few more months like the last several months.
Thoughts from the WSS Research Desk

David Silver

The Dow hit a new high for 2009 and gold hit another record high today as the weaker dollar gave a boost to commodities. Oil futures also were higher, lifting the energy sector, while the dollar, normally considered a safer investment, sunk. The euro was recently at $1.50 and the Dollar Index, representing the dollar's value against six other currencies, flirted with nearly 15-month lows. Gold prices have surged of late as investors expect a spike in inflation following the vast amounts of stimulus hitting the economy and the printing of money. While this is a concern, it seems that fears are still a few months away. According to some data, the recession has already ended, but l the employment data released last Friday disputes that conclusion. The following chart is the six month chart for gold.
Conley Turner

On the energy front, oil and the rest of the commodity complex is seeing positive action today as the value of the U.S. dollar is declining against a basket of other international currencies. There is an inverse relationship between the value of the dollar and the price of oil. Additionally, market participants are paying close attention to the developments in the U.S. Gulf of Mexico as it pertains to Hurricane Ida. Although the weather system has downgraded it from a Category 1 hurricane, it still has the potential to inflict damage to some of the oil installations in the region. As such, companies are reacting accordingly and performing evacuations and other preparations as they deem necessary.

At present, the oil fields in the U.S. Gulf of Mexico account for approximately one quarter of the total production of the U.S. and in the region of 15% for the country's total natural gas production. Light sweet crude for December delivery was trading at about $79.79 a barrel on the New York Mercantile Exchange.

David Urani

Over the weekend a grouping of economists from universities and the government met together to discuss economic data and the errors that skew the data at times. It goes to show that sometimes you have to take those economic reports with a grain of salt. Not the least of the issues at hand was the third quarter GDP report that the economists seem to agree does not accurately account for imports. For example, if a car manufactured here in America uses some parts from overseas, those parts are often accounted for as domestic. As a result, the report generally wrongly assumes that large sums of money are generated here by American workers when they are actually not. It turns out third quarter GDP growth may have actually been in the range of 3.3% rather than the 3.5% that was posted. Reports from the conference noted that virtually all of the 80 economists at the meeting concurred that the major economic releases are overstating U.S. economic activity (including representatives from the Bureau of Labor Statistics that releases the employment report). I think we all probably knew already that some of these numbers are questionable, but here is your assurance. Also, when is the last time that 80 economists agreed on anything?