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CHOOSING THE RIGHT SPORT

This past Friday, Nov. 3, 2006, we were treated the Bureau of Labor Statistics’ [BLS] first guess at October employment data. Here’s a breakdown:

Non Farm Payroll Report:

Actual 92K...Expecting 125K

Now let’s consider the effect the Birth/Death Model had on the Actual:

So, 73 thousand of the reported 92 thousand “NEW” jobs were in fact – hypothetical - the result of a computer model.

But wait…..
Last month’s Labor Report was revised from 51K to 148K?

And the month’s previous to that from 188K to 230K?

And listen to this one...the unemployment rate declined from 4.6% to 4.4%?

Is Anyone Confused Yet?

If any of you find this confusing, you’re not alone.

Do any of you remember the President of the Dallas Fed, Mr. Richard W. Fisher? In the dog days of the-rate-raising-summer-of-2005, he entertained us with this baseball analogy when referring to the FOMC’s stance on interest rates,

“Richard Fisher says the Fed’s policy committee is in the eighth inning of a rate tightening cycle, and entering the ninth.”

Not a baseball player?

No problem!

Perhaps something Fisher-esque with a religious twang [June 14, 2006] would be more to your taste:

“Faith is certainly the basis of your confidence in the Federal Reserve. I have spoken in previous speeches of our “faith-based currency,” a term I use only slightly tongue in cheek. The dollar—like the euro, the yen, the British pound and other currencies—is what economists call a fiat currency. It is backed only by the federal government’s power to raise the revenues needed to meet its obligations and by the rectitude of the U.S. central bank. If the market were to lose faith in either assumption, the dollar would be debased.”

Not a church-goer?

No problem!

Perhaps Fishing a-la Wayne's World [Nov. 2, 2006] is a more to your liking:

“Successful hedge fund managers and effective central bankers share at least one trait: They abide by what I refer to as "the Gretzky principle." Hockey's Great One, Wayne Gretzky, once proclaimed, "I skate to where the puck is going to be, not to where it has been." It seems to me that success, whether for central bankers, hedge fund managers or business economists, comes with anticipating what comes next and acting decisively to be positioned for where the economic "puck" is likely to go.

To apply the Gretzky principle, good judgment, not a small amount of good luck and good data are needed.”

So how does the average investor know whether to bring their baseball mitt, their bible or their hockey stick to the park/pews/arena? Even with “good data,” it’s pretty easy to mess up – isn’t it?

Solution:

If you don’t already have one, consider a consultation with an investment professional who’s a veteran of all the investment seasons. And remember, the “other half” of this web site is none other than Puplava Securities,

“Committed to providing exceptional asset management and educational resources that help investors build, maintain and preserve their wealth.”

Besides all that – they can pitch, preach and pass pucks with the best of them. A good investment professional filters out the noise, and distills and deciphers the cryptic nuances of the investment landscape.

Remember, as an investor you can take your bible and pray anywhere, but it’s no fun showing up at the ballpark in the middle of August with a hockey stick, wearing ice skates – trust me!

Today’s Market

Overseas equity markets were subdued today with Japan’s Nikkei Index gaining 14 points to 16,364. North American markets recorded strong gains to begin the week with the DOW ahead by 119.51 to 12,105.55, the NASDAQ up 35.20 to 2,366.00 and the S & P gaining 15.40 to end the day at 1,379.70. NYMEX crude oil futures gained .88 to close at 60.07 per barrel.

In foreign exchange markets the U.S. Dollar Index added .02 to 85.56.

Interest rates were at a virtual standstill across the board with the benchmark 2-year bond ending the day at 4.82%, the 5-year at 4.68% and the 10-year bond at 4.71%.

The precious metals complex ended the day mixed with COMEX gold futures falling 1.90 to 626.30 per ounce while COMEX silver futures gained .14 to 12.76 per ounce. The XAU Index fell by 1.50 ending the day at 137.52 while the HUI fell .36 to 326.90.

On tap for tomorrow, at 3:00 p.m. Sept. Consumer Credit data is due – expected 5.0 B vs. prior 2.6 B.

Also tomorrow, U.S. mid term elections – so everybody, no matter what your political affiliation, have a great evening and make sure you get out to vote tomorrow!

Rob Kirby

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