"The history of Eureka lies in its future." - Lambert Molinelli, 1878


The author/editor of the Eureka Miner owns common shares of local mining stocks, General Moly (GMO) and Newmont Mining (NEM); together with benchmark miner Freeport-McMoRan (FCX). Please do your own research, markets can turn on you faster than a feral cat.

Friday, October 2, 2009

New Jobs Report..."Staggering"

BREAKING NEWS: Rio de Janeiro chosen as the site for the 2016 Olympics. Chicago and Tokyo eliminated in the first round.

Morning Miners!

It is 5:20 AM. We've got both blue and red label TGIF coffee this morning. A thanks to Raine's for stocking the break room with their very best before the Labor Department's monthly jobs report. The Colonel has CNBC business news on in the shop, be right back.

Ouch! That's a rough one buckaroos. Nonfarm payrolls declined by 263,000 in September, economists had expected a 175,000 decrease. Bill Gross, "The Bond King" from Pimco Funds, called the new numbers "staggering".

In our 21st month of decline, the unemployment rate grew 0.1 percentage point to 9.8%. Since the start of the recession in December 2007, the number of unemployed folks has increased by 7.6 million. Let's give this some perspective. Here are some selected nonfarm payroll numbers going back to the beginning of 2008:

January 2008: -72,000
January 2009: -741,000 (the worst)
August 2009: - 201,000
September 2009: - 263,000 (today's number)

Although we've made considerable progress since January, the reversal from the August numbers is discouraging. Steve Liesman, economist for CNBC, noting there is always room for error in new numbers put it in the best light, "...not worse, but not getting better."

Spot gold on the London Exchange had an interesting reaction to the news, diving down initially then popping back up above the $1000 mark:

The dollar had the opposite reaction, strengthening then falling. This helped support commodities in early morning trading and the gold pop lifted stocks like Barrick into positive territory on an otherwise down market.

Treasury yields are quite low with the long bond sitting under 4%:

2-year Treasury Note: 0.861%
10-yr Treasury Note: 3.157%
30-yr Treasury Bond: 3.957%

Bill Gross predicted that interest rates would remain low and core inflation could approach zero. This makes your lousy 1% bank CD return look better in terms of real interest rates and fixed mortgage rates will probably improve with lower Treasury yields. Not much to get excited about.

To close things out Meredith Whitney wrote a fairly downbeat op-ed in the Wall Street Journal last night:

"Anyone counting on a meaningful economic recovery will be greatly disappointed. How do I know? I follow credit, and credit is contracting. Access to credit is being denied at an accelerating pace. Large, well-capitalized companies have no problem finding credit. Small businesses, on the other hand, have never had a harder time getting a loan." (WSJ, 10/1/2009)

You may recall that Ms. Whitney predicted this recession's banking crisis with nearly 100% accuracy several years ago, a lone voice in the desert then. Hmmm...

Hang in their buckaroos and be happy we live in a gold mining town!

Enough talk, let's walk the walk:

CAUTION: 4-WD is ON - the VIX or "fear index" is above 25 today approaching 30. We are experiencing off-road conditions in the markets (what's this?)

Yellow light is ON for possible adverse regulation/legislation (mercury emissions)

Otherwise, all lights are green on the Eureka Outlook Dashboard (upper right, what's this?)

Oil is down $0.63 in early trading to $70.19 (November contract); Gold is up $5.4 to $1006.1 (December contract, most active); Silver is down $0.030 to $16.410(December contract); Copper is down $.0445 to $2.6925 (December contract); Molybdenum is steady dropped to 13.6.

The DOW is down 34.16 points to 9475.12; the S&P 500, down 4.01 points to 1025.84. The miners are mixed:

Barrick (ABX) $38.36 up 0.49%
Newmont (NEM) $42.44 up 0.09%
General Moly (Eureka Moly, LLC) (GMO) $2.88 down 1.37%
Freeport McMoran (FCX) $64.73 down 1.02% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel stocks are down, (a "tell" for General Moly):

Nucor (NUE) $44.89 down 0.13% - domestic steel manufacturing
ArcelorMittal (MT) $34.56 down 1.17% - global steel producer
POSCO (PKX) $99.71 down 0.29% - South Korean integrated steel producer

The Eureka Miner's Grubstake Portfolio is is down 0.40% to $1,147,586.99 (what is this?).


Colonel Possum

Headline Photograph by Mariana Titus

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