Weekly Wrap: Focus Shifts to Jobs Data
With the clock ticking on the debt ceiling, you probably forgot that the US economy is more than a bunch of Washington yahoos, desperate to make a point. (As a point of reference, in the past 50 years, the debt ceiling has been raised 78 times, 49 times under Republican presidents and 19 times under Democratic presidents.)
This Friday, we will learn whether the US economy resumed somewhat respectable job creation numbers, after two horrible months. Analysts expect that 90,000-100,000 jobs were added in July and the unemployment rate should remain at 9.2 percent.
While there's no doubt the debt ceiling debate has raised important issues about the nation's financial health, I have a sneaking suspicion that most Americans care a heck of lot more about the nation's job crisis. Over the past ten years, a decade when the US economy has expanded by 19 percent and non-financial corporate profits have risen 85 percent, the number of private sector jobs has fallen by nearly 2 million.
Investors were finally shaken out of their steadfast belief that in the end, lawmakers would have to come to an agreement and instead ran for cover, "just in case," as one trader told me. On Friday, investors added anemic economic growth to their list of general worries. Q2 GDP grew at a paltry 1.3 percent and Q1 was revised down to 0.4 percent from 1.9 percent. Wait, that's not all: during the recession (12/07-7/09), the economy was worse than originally reported-contracting 5.1 percent, instead of 4.1 percent; and the recovery so far has only seen annual growth of 2.5 percent, less than half the 5.4 percent enjoyed during previous recoveries.
US stocks posted their worst weekly performance in over a year, which capped-off a three-month losing streak. Still, all three indexes remain higher on the year, thanks to corporate America's largess. With just over 2/3 of S&P 500 companies reporting thus far, 72 percent have beaten estimates and Q2 earnings growth is up 18 percent from a year ago.
- DJIA: 12,143, down 4.2% on week, down 2.1% on month, up 4.9% YTD
- S&P 500: 1292, down 3.9% on week, down 2.1% on month, up 2.7% YTD
- NASDAQ: 2756, down 3.6% on week, down 0.6% on month, up 3.9% YTD
- September Crude Oil: $95.70, down 4.1% on week
- December Gold: $1631.20, up 1.7% on the week (up 8.4% on month)
Total bank failures for 2011 = 61 (3 new bank failures over weekend)
FACTOIDS OF THE WEEK: Debt Edition (New US motto: "At least we're not Greece or Japan!")
Gross Debt as % of GDP (IMF est for 2011)
- US = 99.5%
- China = 17.1%
- Greece = 152.3%
- Japan = 229.1%
IN THE WEEK AHEAD: The debt ceiling debate will take center stage as the August 2nd deadline rapidly approaches. The noise will overshadow reports on manufacturing, auto sales and personal income and spending. Hopefully, by Friday we will be talking about the jobs report.
Mon 8/1:
10:00 ISM Manufacturing Index
10:00 Construction Spening
Tues 8/2: DEBT CEILING DEADLINE
CBS, Pfizer
Auto Sales
8:30 Personal Income and Spending
Weds 8/3:
7:30 Challenger Job Cut Report
8:15 ADP Private Sector Employment
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
Thurs 8/4:
8:30 Weekly Claims
Fri 8/5:
8:30 Employment Report
3:00 Consumer Credit
9:55 Consumer Sentiment