Courtesy of John Nyaradi.
Early exuberance over the November Non Farm Payrolls report faded into Friday’s close to end another volatile week.
The Dow Jones Industrial Average (NYSEARCA:DIA) finished flat on Friday, along with the S&P 500 (NYSEARCA:SPY) but both were up strongly for the week while gold (NYSEARCA:GLD) add +0.6% and oil (NYSEARCA:USO) gained +0.8% on hopes for improved economic conditions.
The November Non Farm Payrolls was the big news with new job creation of 120,000 compared to 125,000 expected and 100,000 for October.
Unemployment declined to 8.6%, a two year low, but the news was less positive than expected as much of the decline was attributed to discouraged workers leaving the job market. This phenomenon is reflected in the labor force participation rate which declined from 64.2% to 64%, the lowest since the end of the 1980 recession, while average duration for unemployment reached a record 40 weeks.
Earnings declined slightly by 0.1% while workweek hours remained steady and so overall, the employment situation remains virtually flat in many respects.
What this means is that employment still isn’t growing close to fast enough to make a meaningful dent in unemployment rates which in turn will likely lead to continued sub-par GDP growth rate for the foreseeable future.
Overseas, European leaders move towards a December 9th summit which will likely be another pivotal moment in their struggle to get in front of their ongoing crisis and U.S. Treasury Secretary Geithner is heading for Europe next week, no doubt to twist some arms in an attempt to put this crisis behind the world financial structure.
Rumors of IMF bailouts and lending facilities abound and we’ll discuss this in greater detail during our weekend update on Sunday, however, the Euro (NYSEARCA:FXE) fell slightly today as concern lingers over the Continent.
So after a huge week, U.S. markets consolidated and look towards the European summit. If Europe’s leaders can finally offer some kind of long term plan to resolve the crisis, the long awaited “Santa Rally” could finally come to town.
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