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Pit Bosses

The market needs a spark, something that goes beyond a silver lining or green shoot, to lift it from here. Many were saying this week would be the real deal, but volume on the road coming in this morning indicates many traders are still probably out, and that could be a good thing. I continue to believe traders prefer a defined trading range, and love the money made going short while spooking investors out of the market from time to time. It's like taking candy from a baby to get the occasional brave souls to head for the hills. On that note, it's working too well because investors are staying out of the market and those brave souls are becoming so thin in number they will not be able to carry stocks higher after the pros have reloaded.

Even a rigged casino allows the suckers to win occasionally. I still think the market should be significantly higher, and at some point it should enjoy a big-time rally that lasts more than 72 hours. But, that will not come at the expense of traders still chilling out at the Jersey Shore. Beyond the grip traders have on the market is the larger issue of individual investor confidence, or the lack of confidence. Money continues to come out of U.S. stocks and head into investments overseas or the bond market. Part of this is smart investing based on facts. Yesterday Manpower (MAN), the giant global job placement agency, released its survey of employer hiring plans for the fourth quarter. In 28 of 36 countries employers are prepared to hire. China, India, Brazil, and Taiwan have the most aggressive plans, with China and Switzerland among those the most optimistic ever in this poll.

While We Wallow and Finger-point

In the U.S., 71% of employers don't plan to hire, and 3% aren't sure yet. This is a typical response in various polls because employers are fighting on several fronts. There's general competition and then there's the war with Washington. Today's official announcement of tax breaks for large capital investments will probably not include building abroad, which is painted as sending American jobs overseas. When Japan and Germany were climbing out of the rubble of WWII, their governments subsidized growth of businesses that sold and grew abroad. It was a brilliant, if not unfair, move that saw their economies spring back to number two and three on the planet. The desire to bring U.S. companies down a notch or two is not only dumb, but will speed up the clock to the point when a majority of American workers are working for foreign companies.

As long as the unions get their cut I guess it's okay with the White House.

The overture to business is too little, too late, and does nothing for sustained job creation. It also isn't going to help small business much either. When President Bush put up similar breaks for office equipment I didn't take the bait because I didn't need new copiers or printers, I needed more clients. I needed the stock market to move higher to assuage fears not just from investors, but from everyone still feeling the sting of the Internet bubble bursting. The President seems to have made the decision to make minor, and somewhat irrelevant, compromises and rely on his ability to get friendly crowds going. Of course, it's easy when your crowd feels inherently like they are victims. At this point, watching union workers that make twice the money as their non-union counterparts make crow about injustice is sickening, but points to the culture of victimization.

We aren't talking about children working sweatshops or immigrants picking fruit as indentured servants, but people are in many instances overpaid for the skill set needed to do their jobs.

There are going to be crowds that hang on to every word and every complaint, and agree with President Obama that all criticism of his presidency is mean-spirited. All these victims believe they are being talked about like dogs, too, when told to step up to the plate without any excuses, even when those excuses may have some validity. Divide and conquer is the wrong backdrop for hiring and the stock market. My observation has been that the President doesn't like the profit-motive or the idea of people becoming too rich, while others think he just doesn't know any better. This grand plan, the would-be September Surprise, proves the latter point; I don't think the President has a clue about how to run an economy.

That's not a crime, nor unique among past occupants of the White House, but in this case it doesn't seem like there is any real interest in learning.

The Market

While stocks stumbled, precious metals soared, with gold reaching a new all-time high (not adjusted for inflation). Silver is on the cusp of a major breakout, and trails the rally in gold significantly. The spread between the two metals is almost at the historic high despite the industrial uses of silver, which should benefit from what amounts to pockets of economic booms around the globe. I really like the risk-reward in silver. We have a position on a silver stock, and I also like the idea of owning coins as well.