Jobs Rundown, Market Records, Coming Megatrend, a Special Announcement and More!

by Addison Wiggin & Ian Mathias

  • More tough news for U.S. jobs… what you need to know in today’s BLS employment report
  • Dow setting records left and right… two historic looks at just how lousy 2009 has been
  • Chris Mayer on the next megatrend… far bigger than the current crisis
  • Chuck Butler explores “a strange thing happening in currencies”
  • Plus, a reader exposes our “simple-minded,” “right-wing babbling” for what it is… at last


  Employment will make or break this depression. Today, it’s not looking so good. 12.5 million Americans are out of work, and counting. Here’s the quick and dirty on the rest of the employment numbers this morning:

  • The economy shed 651,000 jobs in February, right in line with Wall Street’s expectations. That’s the 14th month in a row of net job losses
  • January and December jobs losses were revised down heavily. January was bumped down another 57,000 jobs, to a 655,000 loss. And the BLS altered Decembers by more than 100,000, to a 59-year high of 681,000 lost jobs. (Proof that these guys either put the numbers wherever they want, or that they aren’t very good at keeping track)
  • Thus, over 4.4 million jobs have been lost since the official beginning of the downturn in late 2007.

The “official” unemployment rate is up to 8.1%, thanks to those revisions — a 25-year high. And you know that if the government is willing to cop to that number… it’s really much worse.

  At the same time, over 7.8% of all U.S. mortgages are now delinquent, the Mortgage Bankers Association reports today. That’s the highest since at least 1972, when the MBA started keeping track. 3.3% of U.S. mortgages are in foreclosure, also a record.

  The stock market is taking the news in stride… so far. Dow futures perked up about 50 points after the jobs number, and managed to open this morning up by nearly the same amount.

Then again, traders might just be taking a break from relentless selling. Major indexes were slammed yesterday. Most fell over 4%. There was the usual gloom, but traders got particularly depressed after China failed to go the way of I.O.U.S.A. and pump an extra trillion bucks into its struggling economy.

“The whole world now turns its weary eyes,” recounts Bill Bonner, “not to that bastion of free-market leadership, the United States of America, but to a country that has only had a quasi-free market in goods and services for less than a quarter century… a country still run by Maoists. It is to them that we supposedly look to save the world economy!”

The Dow’s 4% yesterday brings this year’s losses to 25%, just a bear’s hot breath away from the 33% slump the Dow suffered through all of 2008. The old lady finished closed the day at 6,594, a fresh 12-year low… and right in line with our initial forecast.

From its peak, that’s a 53% decline. As much as the media have worn out the phrase “The worst since the Great Depression” now it’s true:

Even before yesterday’s close, we were looking at the worst 41-day open in over 100 years.

In the Dow’s history, the closest to our own downer year was 1920, which registered a 14% decline. We’re in uncharted territory.

“In 1933,” Chris Mayer comments, “the Dow finished up 66% for the year! With all the similarities between now and the 1930s, let’s hope we see that kind of rally. It would be our last chance to sell down to some core positions that we’d be willing to hang onto through the march through the desert — should we follow form with the rest of the 1930s with a Great Depression 2.0.”

SPECIAL ANNOUNCEMENT: As you can see, we’ve been digging deep looking for what’s worked in other eras. Mr. Mayer does such a fine job with that kind of key research, we’re gearing up to launch a brand-new weekly service with him at the helm. It’s tentatively called the Crisis Recovery Report and yes, we’re thinking about sending it out… free… for as long as this unraveling crisis demands. That is, until we’ve reached the other side of this mess — if there is indeed another side.

We’ll let you know the details as they come. We haven’t even set up an official web presence for the report yet… but if you want to get on the early list for the announcement, send your request to:

  There’s was only one new high on the entire NYSE today: Sturm, Ruger… they make guns. The stock is up 71% so far this year and is at a 52-week high. Smith & Wesson is up 75% this year, too.

  As confidence left the market yesterday, traders turned to gold. The spot price jumped about $30 from Thursday’s low, now at around $940 an ounce.

  Oil managed to avoid the madness yesterday, too. The front-month contract took a brief dive during the session, but quickly returned to credit crisis highs just below $45 a barrel.

  Even the mighty dollar couldn’t withstand the swell of selling pressure yesterday. After hitting three-year highs of nearly 90 this week, the dollar index has backed down to 88.3.

  “A strange thing is happening in the currencies,” notes Chuck Butler. “While currency investors have had to live with this trading theme that rewards the dollar with every deep, dark, dangerous data report, this time it appears to be different. The dollar is getting sold on all corners overnight… traders looked at the size of the forecast for job losses and ran for the hills.

“The euro is leading the way higher, with a huge gain overnight… As I walked out the door yesterday afternoon, the euro was barely holding onto the 1.25 handle… When I woke up this morning with a wine glass in my hand — what wine, whose wine, where the hell did I dine? The euro was 1.2675! And we all know what happens when the BIG DOG gets off the porch to chase the dollar down the street… all the little dogs get to chase the dollar too!

“And Japanese yen was one of the best performers, which tells me that the risk takers were back!
“So… Is this a change in the trading theme? Well, one overnight rally doesn’t lend itself to a convincing argument of such. But it certainly points out that the dollar is vulnerable at the margins, and once we get back to fundamentals… watch out!”

  In Washington, a whole new $500 billion legislation is in the works. Congresspeople are pushing through legislation this week that would allow the FDIC to borrow up to $500 from Uncle Sam’s coffer over the next two years. The FDIC’s war chest to rescue failed banks shrank from $52 billion to $19 billion in 2008. Chairwoman Sheila Bair recently said that fund “could become insolvent this year.” Thus — naturally — the House is moving to increase the FDIC’s fund more than 10-fold.

  “Within six years,” Chris Mayer also writes, ending today’s issue with a megatrend worth your attention, “New York will no longer be among the world’s five largest cities. The new top five? Tokyo is No. 1, with a population (35 million) greater than all of Canada. Then follows Mumbai, Sao Paulo, Delhi… and Dhaka. Dhaka? Yes, Dhaka. It’s the capital of Bangladesh.

“‘All cities are cities of the moment,’ says Richard Wurman, the celebrated American architect. He is right. No city stays on top for long. In the year 1000, the most populous city in the world was Cordova, Spain. Beijing was tops in 1500 and 1800. London was the biggest in 1900, New York the biggest in 1950. Today, Tokyo.

“The pace of urbanization is particularly swift in China and India. More than 25 million people move to cities each year (see the chart below).

“Some of the numbers are hard to fathom. As U.S. Global Investors points out in a recent presentation, China will add more people in 15 years than the entire population of the United States. ‘There will be up to 50,000 new skyscrapers,’ the company notes, ‘the equivalent of building 10 New Yorks. There could be up to 170 new mass transit systems. There are only about 70 in Europe today.’

“This massive population shift has enormous effects on infrastructure spending. Trillions of dollars will have to go toward building power systems, roads, water and wastewater systems, ports and more. It’s like what the U.S. went through in the early 20th century — only on a much more massive scale… these changes will create enormous opportunities for investors that a previous generation could barely imagine.”

  “Are you really as simple-minded as your slanted editorializing infers?” asks a reader. “In slamming Sen. Harry Reid for his opposition to the nuclear waste dump at Yucca Mountain and suggesting he’s only interested in spending ‘trillions’ for energy independence, you overlook the most basic requirement for gaining, then retaining, elected office: Make your constituents’ best interests your own. As a citizen of Nevada, specifically Summerlin, I can assure you that most of us who live within 100 miles of Yucca Mountain have made it crystal clear to the senator that we oppose this location as a depository for the nation’s nuclear waste.”

“Personally, I would favor a location about halfway between Baltimore and D.C. Would that be all right with you? We could save those trillions you believe the Democrats want to spend on ‘energy independence.’ (I assume you put the term in quotes so readers would understand that you sneer at the very concept of such self-reliance.)

“Your condescending right-wing babbling may find a ready audience among many readers of The 5, but certainly not all. I wouldn’t find your bias so objectionable if you had even a modicum of Bill Bonner’s charm and wit. Alas, if you haven’t found a way to express yourself as winningly as Mr. Bonner does by this point in your career, I’m certain it will never happen.

“Oh, by the way, I’m sure you find Sen. John Ensign — the current holder of the most conservative voting record in Congress — much more to your liking. Surely, he must get how important it is to dump the country’s radioactive waste on a deserted place like Nevada.

“Sorry to be the one to shatter your dream — Ensign can also read a poll, apparently. He, too, is opposed to opening Yucca Mountain to the nation’s nuclear poison. Heh.”

The 5: Wow… we give in. You caught us.

You did a masterful job at seeing right through our attempt to inform you about a coming investment opportunity in thorium and related companies. Alas, it was just a thinly veiled shot at Sen. Reid and the truly ridiculous concept of “energy independence.” Why on Earth would we want to be self-reliant? In fact, the only purpose of The 5 — hell, all of Agora Financial — is to undermine confidence in legislation, prop up foreign oil companies and promote right-wing agendas.

Phew, it feels great to get that of our chests. What a heavy burden it’s been… all these years. We had to write three books and make a full-length documentary on what a disaster Republican control of Congress and the White House was just to provide adequate cover. But now… you’ve exposed us. We thank you…we can finally end this ridiculous charade. Bring back the neocons! Get Rush on the phone!

We love your idea, by the way, about dumping nuclear refuse between Baltimore and DC. A little toxic waste would actually improve the place.

  The national debt might hit the $11 trillion mark over the weekend. Hope you can still enjoy it.


Addison Wiggin
The 5 Min. Forecast

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