WaveStrength Macro Outlook for November 08, 2006
Welcome to the latest episode of "Thrown Under the Bus!"
By Adam Lass
Let’s start with this report just in from Hollywood: Kevin “K-Fed” Federline has now been rechristened by the Internet gossip monster as “FedEx,” as Britney kicks her ex-line dancer and ex-husband to the curb.
She gets the kids, he gets $600k per annum to shut up and dance.
Next up, let’s play a round of “Old Beetle/New Beetle”: VW CEO Bernd Pischetsrieder has been tossed under the microbus by the Porsche family, who are reputedly increasing their stake in VW, and replacing him with Audi pilot (and old family friend), Martin Winterkorn.
There has been no comment on the forthcoming from Wolfsburg. But those tire tracks on his face pretty much say it all.
Finally, a week after assuring that Defense Secretary Rumsfeld would serve for the remainder of his two-year term and 48 hours after Karl Rove claimed that the Republicans would sweep the elections, President Bush congratulated the Democrats on proving Rove 100% wrong…
And announced that he was accepting Rumsfeld’s resignation. Again, the tire tracks pretty much tell the whole story.
I leave it up to you, good reader, to decide who deserves the boot and who’s getting the shaft.
On to the economy:
Let’s start here with a stat: No sitting party has ever retained the White House when unemployment was over 7% or under 4%, a pretty narrow band of tolerance for such a robust economy.
Wrapping one’s mind around one end is pretty straightforward: The electorate is pretty narrowly divided. When the number of unemployed starts to creep toward one out of ten, it’s enough people to simply vote the man out.
He might deserve that trip under the bus… he might not. But you can just bet that he is going to feel their pain.
The other side of this equation is somewhat less intuitive (but considerably more germane). One would think that full employment would garner the party in power a third, fourth, or even a fifth term.
But before you start printing up Jeb ‘08 posters, consider this: Unemployment is currently floating around 4.4%, its lowest level since May 2001. But as a result, average hourly earnings are up to 0.4%, double the Fed’s stated comfort level of 0.2%.
Meanwhile crude oil put on a fast buck and a half on the slight whisper from U.S. diplomats in Nigeria that militants are planning additional kidnappings and pipeline sabotage.
Facts on the ground are not required here: Just a hint will do when end users are staring down the barrel at Winter shortages. (By the way: WOW readers have seen max gains of 28.13% and 20.75% today on the energy portion of their model portfolio.)
This is very bad news for a market that was sort of hoping to see lowered Fed rates soon. Instead, I suspect the GOP will be joining Mr. Rumsfeld under that bus.
Don’t know if they deserve it or not. But that doesn’t seem to matter much, now does it?