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December 7, 2009 – Jobs Data Doesn’t Jive With ISM

Jobs Data versus Nonmfg ISM, the misuse of TARP, No Breakout or Key Reversal, Gold takes it
on the chin, while the dollar rebounds, and crude oil flirts with its 200-week simple moving
average. Friday was a wash, as Bank Failure Friday resumed!
Jobs Summit Did Not Reflect Improved Job Picture. The president’s job summit was aimed at
battling surging unemployment, but if you believe the November Jobs data, the problem may have
ended without further action needed.
President Obama told 130 business leaders that the government does not have the money for
additional direct investments in job creation. I did not hear a single positive comment from the
participants in the aftermath of the Summit.
Democrats in Congress are considering a tax credit for jobs, additional aid to states, more infrastructure
spending, tax reductions for small businesses and a public jobs program. Speaker Pelosi wants to
direct TARP money to jobs.
TARP may not lose as much money as expected, but did not accomplish its intended purposes
TARP = Toxic Asset Relief Program – Toxic assets were not purchased and continue to grow on and
off bank balance sheets. Bernanke in a recent Q&A told the audience that he still does not know what
some toxic structures are worth.
TARP became a Bank Bailout – The money was intended to increase lending, but instead both
consumer and small businesses see tighter lending standards and credit difficult to get. Wall Street
speculated in commodities and stocks, while Main Street banks bought US Treasuries.
What to do with remaining TARP – Replenish the FDIC Deposit Insurance Fund, so that banks do not
need to pony up three years of fees by year end. Using TARP would suspend bank assessments
allowing them to lend money to consumers and small businesses.
Bank Failure Friday resumed last Friday with six closures bringing the total for 2009 to 130.
The Jobs report showed an expanding service sector, the ISM did not? Friday’s employment
report showed that the Service Sector added 58,000 jobs. This does not jive with the Nonmfg ISM data
released last Thursday. Nonmfg ISM was expected to show a reading of 51, but came in at 48.7
reflecting a contraction in the Service Sector. The jobs component came in at 41.6 suggesting job
losses.
If you believe the increase to 33.2 hours for the Average Workweek, up from 33.0 hours, I would
argue that the National Bureau of Economic Research could time stamp the end of Recession in
November 2009. We will not know this for six to eight months however. This chart shows that the FDIC
believes that the Recession continued in the third quarter.
No Breakout or Key Reversal for the Dow, which remains positive but overbought on its weekly
chart. Key support is the five week modified moving average at 10,108 with a weekly pivot at 10,442
and the resistance on the down trend that goes back to October 2007 down to 10,550 this week. Charts
courtesy of Thomson / Reuters

Gold, which traded at a record high of $1227.50 last Thursday traded down towards my quarterly
support at $1135.14 this morning, down $90. Gold is below its 50-day at $1155 with a weekly pivot at
$1179.
The Dollar appears to have bottomed on Thanksgiving as I predicted. This week’s support is 74.86
with quarterly resistance at 78.65. The euro is back below 1.50 with resistance this week at 1.5027.
Nymex Crude Oil is below its 200-week simple moving average at $75.70, as oil has moved sideways
to down from $82 over the past seven weeks.

Send me your comments and questions to Rsuttmeier@Gmail.com. For more information on our
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That’s today’s Four in Four. Have a great day.

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Richard Suttmeier
Chief Market Strategist
www.ValuEngine.com
(800) 381-5576
As Chief Market Strategist at ValuEngine Inc, my research is published regularly on the website www.ValuEngine.com. I
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