U.S. Unemployment Drops to 9.0 Percent!

I had to smile at the reactions to the non-farm payroll report on Friday.  While the U.S. economy added a lot fewer jobs than expected - well below the rate needed to accommodate new entries into the job market - the official unemployment rate dropped from 9.4 percent to 9.0 percent.  Apparently adjusting the numbers for seasonality includes factoring in the weather, of all things.

I have a suggestion.  Why don't we just say the unemployment rate is 4.0 percent, except for the people who are out of work because of the last recession?  Why spend time and money actually calling people, when we can just tell people what we want them to hear.  Perhaps we should try that with earnings estimates.  "We will stick with the numbers in our quarterly forecast as we would have met them had it not been for the case sales were lower than expected."  How about sporting events?  We can just give the better team a higher score since, normally, they would have won anyway.

My question is, at what point does massaging the numbers turn into rationalization, then denial?  I just heard Mr. Bernanke say U.S. economic policy was forcing fixed income investors to turn to "alternative" investments, but, no, that would not include commodities.  I understand the need to project positivity and hope, but we need to make financial decisions based on real facts.  There is real danger in fitting the facts to correspond to our outlook.

That is the takeaway to today's post.  Putting money into these volatile markets requires that we observe what is happening with an open mind, and protect our money accordingly.  We need to learn what to look for and have the discipline to act on that information.

Don't be misled by the propaganda of the day.  There is a world of market participants who are just waiting to take the money of people who do not have both, the discipline, and a system to protect them from their own emotions.  I even fear for the buy-and-holders when this commodity bubble bursts.  As hard as it is to watch the market go higher without me, I am not about to put new money into the current markets, expecting them to go much higher from here.  In my own case, I expect it will take a substantial correction in the indexes before conditions improve that much.

What about you?  Do you see opportunities in these markets?