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Productivity Trumps Factory Orders - Money Matters for 11/3/05
Two reports released today offer differing views on the direction of the US economy. The first, Productivity, as measured by the Bureau of Labor Statistics of the Labor Dept., was up sharply for the third quarter, rising at an annualized rate of 4.1%. The data on Factory Orders, released by the Census Bureau of the Department of Commerce, dropped by 1.7% in September after an increase of 2.9% in August.
Some of these figures were affected by the hurricanes in the Gulf region, though neither report puts much credence in the data being pushed one way or another. In a way, though, these two reports seem to be at odds. On the one hand, workers are more productive (the data suggests that people worked less hours to produce more), but the Factory Orders reports that these very same productive workers produced less.
This is why the statement of Benjamin Disraeli, "There are three kinds of lies: lies, damn lies, and statistics." is applicably quoted with such frequency. If you read enough of these reports, you eventually just want to go out and see for yourself. Ask a neighbor how he/she thinks things are going or walk around the mall and see if people are actually buying things or just window shopping.
One thing's for sure: the rosy persuasion of the productivity gains is going opposite of the heading of the recent consumer sentiment surveys.
In any case, traders took the news in stride and bought more stocks than they sold, pushing the Dow back above the 10,500 mark and across both its 50 and 200-day moving averages. Not that it's big news. The Dow has crisscrossed the SMAs eight times, but today's nearly 50-point advance put the index of the 30 bluest of blue chips on a footing it hasn't seen in over a month.
Once again, the Nasdaq led the way in terms of percentage gain and crude oil futures, for January delivery, were knocked up another couple of bucks today, dampening the overall mood and more than likely, the size of the gains in stocks.
If you like history to be your guide, November and December have been among the best for appreciation in share prices over the past four years. Beginning in 2001, the Dow has closed higher at the end of December than at the start of November every time. It seems that Americans get into the buying mood in this season not only at the mall, but at the markets as well.
My buy call on silver still looks like a winner. It's up two consecutive days from Tuesday, when it dipped briefly below the $7.50/oz. price. At $7.62, where it closed today, it still looks like a buy, as I see the price increasing to over $8 by January at the latest and ramping upwards from there, with a solid floor at $7.00. I personally don't believe $7.00 silver is something we'll see again any time soon, however.
Dow Jones: +49.86; 10,522.59 close
NYSE Advancers: 1667
Nasdaq Advancers: 1669
NYSE New Highs: 180
Nasdaq New Highs: 182
Gold: -2.70; 461.90 close
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