The U.S. Economy Created 312,000 Jobs in December… The gains far outpaced the 184,000 forecast.
What it means – Adding to the seemingly good news was the upward revision of the October and November jobs numbers by a total of 58,000 and the 3.2% increase in average hourly earnings.
All of this would count as great news except for one thing… the Fed. Since the markets began to tumble in October, investors have worried about the Fed raising rates too quickly. The jobs report today gives the Fed more reason to raise rates, which could worry investors that the Fed will raise rates in the face of weaker earnings and a global slowdown.
Our old friend, the birth/death adjustment, played no part this month, and reduced the number of non-seasonally adjusted jobs by 36,000.
The Shutdown Continues… The federal government has been closed for business for 14 days, with no end in sight.
What it means – President Trump and Democratic leaders don’t appear to have made any progress in finding a compromise that funds the government and addresses the issue of a wall at the southern border. As long as the government remains closed, national parks will operate on a volunteer basis and it will be very difficult to get permits of any sort approved.
For most people, the shutdown doesn’t touch their daily lives, which makes us wonder. If the government shuts down (even partially), why are we still paying all our federal taxes?
However, the shutdown does affect investors. The government doesn’t release many economic statistics during a shutdown, which reduces our ability to evaluate the economy.
The Markets Go on Wild Ride, Redux… The markets repeated some of their crazy action from last week, with the Dow gaining, then falling, then gaining, well, you get the picture.
What it means – If it wasn’t the Fed, then it was worries over the Democrats taking back the House. If it wasn’t the Democrats, then it was Trump tweets.
If it wasn’t the tweets, well, let’s blame the trade war. At least that has some teeth. Apple (Nasdaq: AAPL) announced that it would miss guidance for the fourth quarter, blaming the slowdown on weaker sales in China due to the trade war and general skittishness of Chinese consumers. Because the electronics giant is so big, when it fell almost 10% on Thursday it dragged down all three equity indices. Apple suppliers and others at risk from the trade war also suffered.
Suffering was felt in more than one way by Apple. It lost $100 Billion from this year’s stock buy-back program. This week’s “news” may have been known for months. CEO Tim Cook unloaded all his bonus of 560,000 shares in August. HMMM!
As of Friday morning, China and the U.S. had announced another round of talks, pushing the markets higher once again.
Tesla Cuts Prices on All U.S. Models… The iconic electric car company cut prices by an average of 2% to partially offset the reduced subsidy that took effect at the first of the year.
What it means – Until January 1, Tesla buyers could claim a $7,500 tax credit, which was the federal government’s way to persuade consumers to buy electric vehicles. But the credit begins to fade when a car company has sold 200,000 units, a milestone Tesla passed in the middle of 2018. The subsidy dropped by 50% on January 1st and will be cut in half again in six months before disappearing altogether in 2020.
GM also reached the tipping point near the end of 2018 and will see subsidies cut on its electric vehicles as well. Or, it would, if it still sold electric cars. GM recently announced it will no longer produce its vaunted Volt. But don’t worry, the company has plenty of exciting electric models in the works for 2020 and beyond.
In Alaska, Roadkill Is Put to Good Use… Alaskans are so used to picking up roadkill and using it for food that state troopers maintain a list of those who will come to an accident scene any day, at any time, to pick up a carcass. According to the High Country News:
Every year, between 600 and 800 moose are killed in Alaska by cars, leaving up to 250,000 pounds of organic, free-range meat on the road. State troopers who respond to these collisions keep a list of charities and families who have agreed to drive to the scene of an accident at any time, in any weather, to haul away and butcher the body.
That’s one way to stretch the grocery budget.
Data supplied by Dent Research/Delray Beach Publishing
“When the facts change, I change my mind.
What do you do, sir?” ~ John Maynard Keynes
Our plan is “the plan will change.”
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