Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Friday, October 05, 2007

And The Jobs Number Is ...

Job growth was +110,000, versus expectations of a 100,000 gain, so no big deal, right? But the big surprise was a HUGE revision to last month’s number – the 4,000-job loss was revised to a 89,000 job gain.

Looking at that, the non-farms payroll number is just worthless The swing in last month's number (93,000) is almost as much as the gain this month. Why does the market put any faith in it? The bureaucrats in Washington should be ashamed of themselves.

Nonethelss, here is the rest: July payrolls were revised up to 93,000 from 68,000. The separate household survey, by the way, was +463,000, the biggest reading in many, many months. Average hourly earnings gain was 0.4% (above the 0.3% forecast) and the YOY gain in average hourly earnings was 4.1, above the 3.9% forecast. Immediate reaction: Dollar bullish, gold bearish, stock bullish.
And yet our Red-Hot Canadian Small Caps stocks are holding up pretty well. Go figure.

For more on the jobs number, see this excellent analysis by Mike Larson at his blog, Interest Rate Roundup.

But this brings us back to the US dollar chart I showed you yesterday. I've renumbered the lines somewhat, swapping #2 with #3, because I really should order them by the order in which they will present resistance for the greenback ...

I expect the US dollar to push through this resistance and head higher. Along with the jobs number, it should also get a boost from yesterday's speech by Dallas Federal Reserve Bank President Richard Fisher. He said the global economy is facing 'agri-flation', a period of rising food prices 'that may be more sustained than we would like' and could last several years.

Gee, sounds he's endorsing my Agriculture Boom report, doesn't it? If you bought that report, you know how those stocks are doing -- bang, zoom! If you haven't got your hot little hands on it, it's not too late. In fact, now's a good time!

Anyway, let's sit back and let the dollar rally for a bit. We should get better prices on natural resource stocks in just a bit, and the longer term picture natural resource stocks is very bullish indeed.


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