FRIDAY DECEMBER 4, 2009

The end of the gold rush?

The unemployment report was surprisingly strong this morning, posting a loss of "only" 11,000 jobs and a rate reduction to 10.0%.  At first, many in the market thought the 11,000 was a misprint, as the forecast was for a loss of close to 100,000 jobs.  The report was ten times better than expected!  This is certainly good news for the economy and shows the trend in employment is improving.  This strong report suggests that economic growth may be accelerating.


What does this mean for the markets?  The implication is that it may not be necessary to maintain 0% interest rates for the Fed's "extended period of time."  An "extended period of time" just got shorter.  This means the U.S. dollar may cease to be the market's  punching bag and the gold rush may be over.  Indeed, the dollar is up strongly (nearly 1.4%) on the day while gold is down $56 (-5%).


Today's positive number is encouraging, but it is just one number.  The market will need confirmation of this strength in the weeks ahead.  If the trend continues to improve, the equity market may begin to attract money that has been going into commodities.

POSTED AT 1899-12-30 13:51:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

RECENT POSTS

Targeted and Temporary


Better Unemployment Number


The "Safety of Bonds" Myth


Just like that!


Ugly August


Bright Side of Double Dip Fears


All eyes on Wyoming


Lack of Business Confidence


Are bonds forecasting a double dip?


Are rates too high?

The opinions expressed here do not represent the views of Alliance Financial Corporation and Alliance Bank, N.A. This communication is not an offer or solicitation for the purchase or sale of any security, is for general informational purposes only and does not provide personalized investment advice. When making personal investment decisions you should consult your investment adviser or rely on your own research. Copyright 2008.