Overall a decent week for the markets until Friday’s Non-farm payroll report. The BLS reported no new jobs created in August and revised July’s jobs downward from +117,000 to +85,000. Prior to the 8:30 am release, the German DAX was down over 3% on continued fears of the Greek bailout and pressure on European banks.

For the week, the S&P500 and the Dow were down .60%, and the NASDAQ was flat. Also of note, is the yield curve which shows the relationship between bonds maturing at different times. It typically curves up steeply in a healthy economic environment. Any flattening of that curve has historically been seen as a sign of a slowing economy. (See FLAT below).

“Operation TWIST” will be a word that you will be hearing quite a bit in the next few weeks. Under Operation Twist, the Fed could use some of the proceeds of its portfolio to purchase longer-term Treasury notes possibly as far out as 30 years. That would allow Bernanke and Co. to help bring down long-term interest rates without printing more cash.

In other news, China is intensifying its purchases of copper. Brazil cut interest rates by 50 basis points and diamond prices are up 50% over last year on strong purchases from India and China. If you have an undisclosed account overseas, the IRS amnesty program expires on September 9th. Also, 17 states have set record sales of lottery tickets as a sign of the times.

Earlier this week, I wrote about mutual funds under-performing. Hedge fund managers are doing terribly this year, in general. Many well-known hedge funds are down 20%, 30%, or worse for the year if they use leverage. This puts intense pressure on them to play catch-up before the year ends. This pressure to perform can and will likely lead to increased volatility and perhaps a major rally for the remainder of the year.

The last chart is a comparison of unemployment rates and duration for all recessions since World War II. As you can see from the chart, this is the “Great Recession” for jobs. It has lasted longer than any previous recession.

Enjoy your long weekend.

 

 

 

 

 

Key Rates from Bloomberg.com

CURRENT 1 MO PRIOR 3 MO PRIOR 6 MO PRIOR 1 YR PRIOR
Fed Funds Rate 0.12 0.15 0.11 0.16 0.21
Fed Reserve Target Rate 0.25 0.25 0.25 0.25 0.25
Prime Rate 3.25 3.25 3.25 3.25 3.25
US Unemployment Rate 9.10 9.10 9.10 8.90 9.60
1-Month Libor 0.22 0.20 0.19 0.26 0.26
3-Month Libor 0.33 0.26 0.25 0.31 0.29

Mortgage* (National Average)

provided by Bankrate.com
CURRENT 1 MO PRIOR 3 MO PRIOR 6 MO PRIOR 1 YR PRIOR
30-Year Fixed 4.26 4.42 4.49 4.85 4.33
15-Year Fixed 3.39 3.55 3.73 4.13 3.85
5/1-Year ARM 2.99 2.91 3.05 3.57 3.39
1-Year ARM 2.95 3.15 3.14 3.02 3.67
30-Year Fixed Jumbo 4.82 4.97 5.06 5.43 5.46
15-Year Fixed Jumbo 4.21 4.37 4.40 4.72 5.02
5/1-Year ARM Jumbo 3.24 3.38 3.43 3.84 4.20

 

 

iShares S&P Goldman Sachs Commodity Index Trust

 

iShares MSCI EAFE Index

 

iShares iBoxx $ High Yield Corporate Bond

 

iShares Dow Jones US Real Estate

iPath US Treasury Flattener ETN

CurrencyShares Swiss Franc Trust

Standard & Poor 500   Groups and Sectors

 

 

 

 

 

 

American Association of Individual Investors – Investor Sentiment Indicator

 

 

Economic Calendar from Econoday.com
Monday Sep 5 Tuesday Sep 6 Wednesday Sep 7 Thursday Sep 8 Friday Sep 9
US Holiday: Labor DayAll Markets Closed
ISM Non-Mfg Index
[djStar]
10:00 AM ET

Narayana Kocherlakota Speaks
1:10 PM ET

Redbook
[Bullet
8:55 AM ET
Beige Book
[djStar]
2:00 PM ET
Treasury STRIPS
[Bullet
3:00 PM ET

John Williams Speaks
4:00 PM ET

Weekly Bill Settlement

Jobless Claims
[Star]
8:30 AM ET

Ben Bernanke Speaks
1:00 PM ET

Consumer Credit
[Bullet
3:00 PM ET
Money Supply
[Bullet
4:30 PM ET
Wholesale Trade
[Bullet
10:00 AM ET

 

 

chart of the day, scariest jobs chat ever, sept 2011

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