And We Head Into the 4th Quarter

WOW – start your holiday gift lists.

The 3^rd quarter of this year is in the books and college football season is 1/3 over as well.

This time of the year flies for me, as I am a huge University of South Carolina Gamecocks fan.  No doubt everyone who reads this will be tuned into ESPN College Gameday this Saturday as they broadcast from the South Carolina campus prior to the 7pm kickoff against #5 ranked Georgia.

Prediction – Gamecocks win under the lights with a record setting crowd jumping in unison to the new $8m audio/video system pumping out some Sandstorm.

This last quarter was a pretty good one for investors. While there was plenty of economic uncertainty both here and abroad, the heavy lifting by the global central banks was what was really responsible for the nice move in equities. That’s what $40b a month in mortgage bond purchases got us…for now.

Here’s how markets finished both the week and the 3^rd Quarter. I’ll have a full quarterly review out within a week or so.

Employment Reports on Friday

Good thing for the President that the employment reports come out after the first debate – otherwise, Lucy have some es-splanin’ to do! On Friday we’ll see the Nonfarm payrolls and the unemployment rate released for September.  Don’t expect to see any surge in new hiring.

Remember that in August, the economy managed to generate a net increase of just 96,000 jobs.  That number sucks.   Big time.  Here’s why – most analysts believe the economy has to create at least 150,000 jobs each month to match the population growth AND to prevent the unemployment rate from rising.

I addressed the August unemployment rate first in my early September blog and then after the report came out in my mid-September blog, but as a refresher, the rate fell by 0.2 percentage points from 8.3% down to 8.1%.  That LOOKS good, but it actually sucks because it was caused by a drop in the labor force.

See, when job seekers become so dejected over their prospects for meaningful employment that they just stop searching for work, they cease being counted, because in order to be counted in the unemployment rate, you must be actively seeking a job.

So when you quit looking for a job, they quit counting you in the math.  Nice huh?

So what can we expect for the report coming out this Friday?  Well, according to Bloomberg, the consensus among economists calls for a 113,000 rise in nonfarm payrolls, while the unemployment rate is forecast to hold at 8.1%.

My bet – don’t hold your breath for that number, I think it comes in below.  Weak hiring is a function of the amount of economic uncertainty we are currently experiencing.  Add to that an economy that is barely growing as well as a sharp drop in durable goods orders in August that underscores troubles among manufacturers and I just don’t see the U.S printing a whole lot of new jobs last month.

Now that I’m out there in writing – watch me be wrong.  I hope I didn’t jinx the Gamecocks too.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.  The 2, 10 and 30 year Treasury is simply the yield at the close of the day.

⁽¹⁾      West Texas Intermediate crude spot price is as of end of week.

⁽²⁾      London Bullion Market Association; gold fixing pricing at 3 p.m. London time.