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From China To Crime To Powerball In The First Week Of 2016

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U.S. equities shrugged off a mammoth new jobs number, clinging instead to the rate ramifications of the swaggering data. The report showed that new positions created in December numbered 292,000, a data point that will sure be revised upward (as were the numbers for October and November).

That means that in Q4 of 2015, jobs will have been added at a rate of 3.4 million per year. Can the U.S. economy keep the pace up? Probably not, but the cooling down will take some time.

It also means that the Federal Reserve through the Federal Open Market Committee most likely will remain on track to raise rates again as it strives to return to monetary normalcy. Although the Fed needs to continue to closely watch labor utilization, which is finally beginning to improve and wage inflation, which stubbornly is staying subdued and sometimes falls back a peg or two. (s it did this month.

Equities traders are still nervous about China’s woes, although it is really the multinationals that are mostly being affected and that reflects quite strongly in stock prices.

That doesn’t mean America’s economy is sick or faltering, but rather that more than any other country’s markets, those in the U.S. (New York) act like the world economy’s thermometer.

China has real problems, as do Brazil, Russia, parts of Southeast Asia/Oceania, Africa and some other countries in South America. Europe is slow but doing decently. Canada, Australia and Japan have their woes but are not hurting, although the two former British colonies have issues with their commodities’ sector. Japan still needs to go wild with easier credit to encourage domestic consumption.

Another focus of investors today in New York was the continuing swan dive of oil into an abyss of low pricing. At 3:30 in New York, both West Texas Intermediate and Brent North Sea were trading below $34 per barrel.

WTI settled down 10% on the week and is searching for a bottom the way you do when coming down a ladder in a dream, foot out tapping, seeking solid ground.

Gold lost about $6 (again at 3:30 in NY) as profit-takers dropped by to pick up their winnings for the week. A stronger dollar didn’t help gold, but most of the downward momentum was provided in “real” trading on the floor.

Silver was hurt quite a bit more than gold, down 37 cents per ounce or 2.50%. Aside from blaming it on profit taking, the price drop in the precious metals is anomalous because certainly a safe haven is called for at least for the short term while China gets its self together and the rest of the world processes he meaning of China’s participation in the world economy.

The 10-year Treasury bond finished the day effectively unchanged, underscoring the indifference to the need for save havens.

The VIX (measure of volatility) rose into the mid-25 range – high certainly – but analysts are saying it is overbought and at least through that specialized lens they believe volatility will decrease soon.

The world of crime and punishment will present some diversion for those who weathered the market storms of the first trading week of 2016.

El Chapo – Mexico’s Drug Overlord – was captured again. A San Francisco gangster named “Shrimp Boy,” the chief or dragonhead of the Chee Kung Tong, was convicted of 162 counts of racketeering, murder, mayhem and so forth. The so-called affluenza mom who helped her vehicular homicide son to flee to Mexico to avoid serving probation was put in a Texas jail. She promptly complained about the conditions prompting the judge to more or less scoff at her.

Finally, the Powerball jackpot tomorrow is expected to reach $800 with a cash value of over $400 million. Dream on.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer