U.S. Economy

In This Market, Don't Drink the Kool-Aid

bear-market

Stocks hit new records last week as central banks around the world continued writing checks to prop up still struggling economies, the price of oil stabilized, Vladimir Putin lured the West into a phony truce in the Ukraine, and Athens and the EU tried to pretend that Greece isn't hopelessly insolvent or that it even matters if it is or isn't.

In other words, investors were once again all too willing to ignore economic reality and drink the Kool Aid being served by central bankers and politicians.

We might as well call this the "Jonestown Market" because the cult leader Jim Jones could just as easily be handing out paper cups filled with colored water and investors would be swilling it down...

January Jobs Report Doesn't Mean What Washington Says It Does

January jobs report

The January jobs report seemed like good news.

The U.S. Labor Department said 257,000 jobs were added to the economy. That easily beat the 230,000 numbers analysts had expected.

And yet unemployment ticked up to 5.7% from 5.6%. Money Morning Chief Investment Strategist Keith Fitz-Gerald sees the conflicting data in the jobs report as more proof the recovery is not the success President Barack Obama claims.

In this video, Fitz-Gerald discusses what the funny numbers from the January jobs report mean for the U.S. economy...

A Measured View of a Difficult Week and the Markets

market volatility

France's 9-11 should remind investors that the world sits atop a precarious geopolitical perch. Madmen with guns have the ability to wreak enormous damage on the fabric of society, which in turn places the stability of markets at risk.

Last week's tragic events in Paris are likely to impose significantly greater security costs on Western societies while leading them to question the open borders that feed immigration and trade, two keys to the future economic growth that will be necessary to dig out of the deepening debt hole they have dug themselves.

Depending on the response, jihadists could win a bigger victory than they imagine if Western governments surrender to their worst fears...

The Scary Wage Growth Story in the December Jobs Report

December jobs report

The December jobs report released today (Friday) by the U.S. Department of Labor highlights what’s missing in the job market’s recovery: wage growth.

According to the report, the United States added 252,000 jobs last month, ahead of consensus estimates of 240,000. That was enough to push the unemployment rate down to 5.6%.

But those impressive numbers were not enough to distract from the bigger story of falling wages…

Facebook Stock (Nasdaq: FB) Gets Boost from Acquisition in Stock Market Today

Stock market today

Stock market today, Friday, Jan. 9: Good morning! Stock market futures Friday morning forecast a 31-point gain from yesterday's close. On Thursday, the Dow Jones rallied 323 points on expectations that the European Central Bank will take more aggressive action to stave off deflation and debt crisis, coupled with swirling optimism for the U.S. economy.

Today will center on jobs, jobs, and more jobs. This morning, the December jobs report indicated that the U.S. economy added 252,000 jobs last month, surpassing consensus expectations of 240,000. As a result, the U.S. unemployment rate slipped to 5.6%.

While that may fuel a short-term surge in the markets, investors remain cautious about the Federal Reserve's desire to raise interest rates this year. In a speech yesterday, Minneapolis Fed President Narayana Kocherlakota said that the central bank should not increase rates in 2015; however, he is not a voting member of the FOMC this year. That sentiment was followed by voting-member Charles Evans. The Chicago Fed President told a CNBC audience this morning that the U.S. job markets have shown strong growth. But, he said, he'd like the central bank to wait until 2016 to raise interest rates.

Here's what else you should know about the stock market today - including your "Money Morning Tip of the Day" - to make it a profitable Friday...

This Bear Market Indicator Is Off the Mark

bear-wave

Investors are taught that bear markets can't occur unless the Treasury yield curve inverts - that is, unless short-term interest rates are higher than long-term interest rates.

And that can only happen if the Federal Reserve raises the Federal Funds rate, which is the short-term rate that the Fed controls.

But that measure may be off the mark this time, and here's why...

Where September's Job Gains Came From

where September's job gains came from

The unemployment rate dipped below 6% for the first time in six years, as the U.S. Department of Labor reported today (Friday) that employers added 248,000 new jobs in September. The gains took the unemployment rate down to 5.9% from August's 6.1% and beat consensus estimates of 215,000.

Here's where September's job gains came from - plus a look at the trouble still lurking beneath the numbers...

Will Alibaba Buy eBay Once PayPal Is Gone?

will Alibaba buy ebay

Ebay Inc.’s (Nasdaq: EBAY) plans to spin off its PayPal unit has left many on Wall Street salivating over the potential of the stand-alone payments business.

And some pundits are speculating that Google Inc. (Nasdaq: GOOG) or Alibaba Group Holding Ltd. (NYSE: BABA) might buy PayPal.

But they should be asking this question: Will Alibaba buy eBay?

Here’s why a deal would make sense for both companies…

Here’s why a deal makes sense for both companies…

Turn the Tables on the Market Manipulators

market manipulators

In theory, we have free markets, where manipulation is illegal and punishable.

We've found that's not often the case in the financial markets.

Unfortunately, this web of "disruptive practices" and "market rigging" is not likely to change any time soon.

Despite a government "crackdown" on illegalities that occasionally makes the headlines.

The problem may be especially manifest in the futures market.

But you don't have to be a victim...

YHOO Stock Now Has to Wrestle with Taxes Post-Alibaba IPO

yhoo stock

Yahoo! Inc. (Nasdaq: YHOO) stock rose 4% today, with Starboard Value LP reportedly buying up a large stake in the company.

The investment management firm’s decision is a positive development for YHOO, which had seen its shares tumble for most of the week on concerns that as it sheds its portfolio of overseas investments, the remaining core business will be valueless.

Here’s one thing YHOO needs to do to reassure shareholders now…

Dow Jones Makes It Clear That Inversion Deals Are Unwanted Trend

dow and inversion deals

Dow Jones Industrial Average officials just made membership requirements for its elite index even more stringent, prompted by a surge in inversion deals made to avoid the high U.S. corporate tax rate.

The committee overseeing the storied blue-chip benchmark just updated the definition for index inclusion. The classification now states that companies that conduct business in the United States, but are incorporated abroad, are not eligible for admission in the 30-stock index.

The Dow tweaked the language used in its process of accepting components into the coveted index to officially read that member companies must be incorporated and headquartered in the United States. Additionally, the United States must be a company’s largest revenue-generating country.

That means the new eligibility requirements clearly exclude companies that have moved overseas via inversion deals.

Keep reading...

Dividend-Paying Stocks: MSFT, MCD, and 22 More New Dividend Boosts

The profusion of dividend-paying stocks that have increased payouts over the last several weeks reflects a robust second-quarter earnings season.

Companies in the S&P 500 turned in 10.3% earnings growth in Q2 - the highest advance since 2011's third quarter.

Last week Microsoft </strong>(Nasdaq: MSFT), McDonald's </strong>(NYSE: MCD), and 22 other dividend stocks raised payouts. Here's the full list of dividend hikes announced during the week ending Sept. 19, 2014.

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