More employment news

and a bounce in SOG

Unemployment figures came out today. The unemployment rate dropped from 4.8% to 4.6%. Non-farm payrolls were up 531k jobs. This beat the consensus estimate of 450k. Average hourly earnings also continued their upward pace at 4.9% year-over-year.

The biggest job gains occurred in; leisure and hospitality (164k), professional and business services (100k), manufacturing (60k), and in transportation and warehousing (54k). The two big ones to me are the manufacturing and the transportation/warehousing job gains. This plays into the idea that manufacturing is coming back to the US because retailers and the service industry are sick of the shortages. They know they need to supply products and are now willing to purchase domestically made goods. Also, they are beginning to ditch the ‘just-in-time’ inventory plan. This is because ‘just-in-time’ isn’t soon enough when you are ordering from overseas and have to wait in the port backlog.

The labor market has recovered from the government enforced shutdown of the economy. The new hurdle ahead is the vaccine mandate. Government mandates are always bad news. They cause shortages and black markets. This mandate, if it doesn’t get rescinded, will do the same. The good news is there are many states that are challenging the new rule pushed out by OSHA. It is always a win for the people when the system of government gets gummed up. The infighting of the democrats has been especially tremendous. Every day I hear on ABC radio news that there is going to be a vote on the bills. It gets even funnier when they say it is really close to passing. This is wishful thinking on the media’s end.

These bills could very well pass and make it to the president’s desk but it will take much more compromise. Much more. The far-left wing of the party believes it is their time, so they’ve put their foot down. The moderates, led by Manchin and Sinema, are having none of it. In fact, the recent election red wave has Manchin deeply concerned that the big bills are a swift path to democrat defeat in 2022. If anything, he will become more emboldened to stop the far-left from achieving any of their desired goals.

Also interesting to me is the labor force participation rates. While the headline number has remained inside the same range since June 2020, behind the scenes we see something else going on.

The participation rate of 20-24 year-olds in the labor force took the biggest hit during the government shutdown. The rate for those 55 and over looks to be in decline. The only group that has surpassed their rate prior to the shutdown is the 16-19 age group. The largest group, those 25-54, is an entire percentage point lower than the rate in Feb of 2020. This is an interesting phenomenon in the labor market. Boomers are retiring and those 16-19 are finding jobs while the rest muddle along.

Finally, SOG.

Oil had a big day. It has rebounded back above $81/bbl. This should be no surprise to those that read yesterday’s article. The supply constraints are continuing to choke out domestic production and the idea that OPEC is going to increase production is a pipe-dream.

Gold also had a big day today. Today was a big reversal from the move gold made but three days ago when the Fed announced the taper. Gold’s COMEX December contract is back to $1820 after gaining $26.50 today. I’m getting really excited about gold. I plan to start a small position in the next week. My goal is to start small, test the water, and if gold can get past $1830, it should be able to test $1900 again. $1900 will be the big test for gold.

Silver is also looking strong. I spent some time yesterday talking with a local dealer. He shared with me that coins have been extremely hard to come by. He often has many gold and silver 1 oz coins as well as a large collection of numismatic coins. He is a big player in the local estate sales and will often bid on many lots to secure product. He has found that many of the lots of coins are being held back and sales delayed. He often has to rebid on many of them with higher prices and has to wait long times for delivery. He said he had never seen anything quite like it. He also shared with me that people will come in and buy entire lots from him. They will spend hundreds to thousands of dollars in one fell swoop. He found this perplexing. He understood the situation, however. He knows that the government has printed too much money and that people are looking for something with “value”. It convinced me! I bought several coins from him.

Hold onto your hats. This could just be getting started.