Jobs Report Slams Stocks, Toyota Dethrones Ford, 2007 Hot Google Searches, and More!

by Addison Wiggin & Ian Mathias

  • Another disappointing jobs report… is recession imminent?
  • Toyota ends Ford’s 75-year streak, takes aim at GM’s No. 1 spot
  • Eric Fry with another case to buy financials… carefully
  • Oil hits $100 again… Byron King on the world’s “next great oil frontier”
  • Google’s hot searches of 2007 reveal a glaring difference between U.S. and Chinese growth
  • Plus, “Load up on bullets,” we’re advised… details below

The U.S. economy added 18,000 jobs in December, over 30,000 less than analysts expected, reports the Labor Department this morning. Unemployment inched its way up to 5%.

The Labor Department’s report comes in contrast to yesterday’s ADP private sector jobs report, which estimated job growth of 40,000 employees.

On the news, the Dow was down 1% before the market even opened.

Japanese stocks took a beating overnight, too. The Nikkei 225 fell a full 4%. The Tokyo Stock Exchange had been closed since last Friday for the holidays. When traders returned… well… they had some catching up to do.

The Nikkei is now at its lowest level since the summer of 2006.

But all is not bad for Japanese blue chips. Toyota cars and trucks outsold Ford in the U.S. in 2007, ending Ford’s 75-year reign as the nation’s No. 2 automaker. Toyota sold 2.62 million vehicles in 2007, about 50,000 more than Ford. That’s a 3% rise in U.S. sales for the Japanese automaker. Ford sales, on the other hand, fell 12%.

Only GM stands in Toyota’s path to becoming America’s top automaker. GM sold well over a million more cars and trucks in 2007 than Toyota. But like Ford, GM sales had fallen from 2006, down 6%. Worldwide sales statistics will be published later this month.

From an investment perspective, well… they’re all dogs. Toyota, Ford and GM shares are all currently flirting with 18-month lows.

One of last year’s biggest credit crunch casualties — the asset-backed commercial paper market — rose by $26 billion last week, its first weekly growth since August.

“The ABCP market is the market that provides short-term financing to the folks who issue mortgages, credit cards and other types of loans,” explains Eric Fry.

“The uptick is good news, but don’t break out the Dom Perignon. Andre Cold Duck would be more appropriate. The Bloomberg News story highlights the ‘seasonally adjusted’ gain of $26.3 billion. But the nonseasonally adjusted ABCP market grew by only $8.3 billion last week. The nearby chart depicts last week’s nearly invisible bounce.

“So just maybe, real-world investors are returning to the CP market. In which case, finance companies might finally procure some of the capital they desperately need. And if no new crisis comes along, the finance companies might start making a little money again.”

For more on this sudden reversal, be sure to check out Eric and Joel’s latest Rude Awakening

Morningstar named Bill Gross and Will Danoff its top fund managers of 2007 yesterday. That’s the third title for king o’ bonds Bill Gross and the Pimco Total Return Fund. Will Danoff, Morningstar’s best stock fund manager, leads Fidelity’s Contrafund and Fidelity Advisor New Insights Fund.

Contrafund has returned an annualized 10% over the last 10 years.

“Here is a chart I thought your readers might like to see,” offers one reader “It shows the five worst performing Dow Stocks year to date, and how only after just two days of trading they are showing substantial losses in industries that form the backbone of the economy.”

“The worst performing Dow stocks year to date are in the businesses of insurance, automobile manufacturing, banking, home building supply and computer chips! If the stock market is a barometer, then a broad-based recession or worse could materialize shortly!”

The number of Americans filing for consumer bankruptcy jumped 40% in 2007, the American Bankruptcy Institute reported yesterday. 801,840 Americans filed in 2007… yikes.

The real estate market hasn’t topped in New York… yet. The median price of a Manhattan condo or co-op apartment rose 14-15% in the last three months of 2007, reports a CNN survey today.

This “average” abode on the New York island will set you back about $850,000. Brokers interviewed by CNN attributed booming foreign interest (thanks a lot, useless greenback), Wall Street bonuses and lower interest rates to the year-end boom.

Oil tested the $100 mark yet again. Crude barrels traded as high as $100.09 around lunchtime yesterday, before falling back to $99. Today’s jobs report has cast enough recession fear to bring oil back down to $97 as we write. Or so the theory goes… slower economy, less oil demand.

“The next great oil frontier region of the world will be offshore Namibia,” predicts our oil sage Byron King this morning.

South Africa’s neighbor to the north has recently attracted attention from drillers all over the world. Brazilian oil guru Marcio Rocha Mello claims to have found oil and gas seeps only a meter deep into Namibian oil last month.

Companies like EnerGulf have since flocked to the region.

“The geology is a southerly trend of what one sees offshore Angola,” says Byron, a Harvard-trained geologist himself, “and in some respects a mirror image of the offshore region of Brazil. In 2008, offshore development in Namibia will greatly benefit the manufacturing and shipbuilding economy of South Africa.”

Both gold and the dollar stayed fairly even for the day yesterday. The former near its all-time high… the latter near all-time lows.

Need we say more?

We found this Google chart interesting, too. Even though Mike Huckabee and Barack Obama took Iowa last night… when it comes to a presidential candidate’s Internet popularity, Ron Paul is slaughtering his competitors:

After more than doubling Rudy Giuliani’s effort in Iowa, Fox News is apparently reconsidering Dr. Paul’s invitation to the New Hampshire Republican Debate on Jan. 6. It’s astounding to us… even though he pulled in 10% of the caucus, Paul was barely mentioned in mainstream coverage. Giuliani getting walloped was a bigger story.

And we have to laugh. Romney’s millions were effectively spent, eh? What a joke.

(For more on Paul’s efforts in Iowa, check out Dave’s latest entry in the Daily Reckoning blog )

“Despite guv’mint info to the contrary,” a reader tells us this morning, “you can add the cost of bullets to the list of skyrocketing consumer prices. While reading Outdoor Life (Page 14, November 2007) at the doctor’s office, I ran across this: “Ammo Prices Continue to Shoot Upward” and that “Some rifle cartridges have more than doubled in the last year.” In other words, some ammo has outperformed gold in 2006, and I can’t find an ETF anywhere that covers the sector.

“This upsurge in prices is blamed on the “rising price of global commodities such as copper, brass, nickel steel and lead.” Clearly, these items are not found on the shopping list of raw materials used by manufacturers of the consumer goods calculated into the CPI. Also blamed are the “increased needs of the U.S. military” along with the usual list of suspects (China) who are now consuming our resources.

“Perhaps a more sinister explanation fits. Could the guv’mint be secretly manipulating bullet prices to end run the Second Amendment?

“Load up on bullets now. You will be glad for it someday soon!”


Addison Wiggin
The 5 Min. Forecast

Jobless rate jumps to 5% as payroll growth stalls
Manhattan home prices: Still crazy
Toyota passes Ford as 2nd-biggest auto seller in US


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