Another bad unemployment report -- DOW up 2%

[Dave McClung]

It's a crazy world. This morning the unemployment report showed that the unemployment rate is up (population growth was more than job growth). As a result, the DOW is up 2% over yesterday. I have just one word "irrational."

[Diane Likens]

I gave up on trying to figure out the market several years ago. I've adopted an "it is what it is" attitude. One of the good points of being as poor as I am -- I don't have much to lose!

[Doug Ward]

Dave, from what I am hearing, the rally is because the job growth number came in stronger than anticipated. The market rarely responds to the unemployment rate, but some underlying indicators. The rate increased because some seasonal adjustment factors were considered - the same factors that made the rate look rosier a few months ago.

[Glenn Messer]

I heard someone say that they think that the market will rally off of bad reports (today was not a good report) to encourage the fed to print more money.

None of this really makes much sense to me.

[Dave McClung]

Dave, from what I am hearing, the rally is because the job growth number came in stronger than anticipated. The market rarely responds to the unemployment rate, but some underlying indicators. The rate increased because some seasonal adjustment factors were considered - the same factors that made the rate look rosier a few months ago.

Doug, I heard the same report. It doesn't make sense to me. I think sometimes the media tries to provide a reason to actions which are irrational.

[Ryan Scott]

The numbers were almost 50% better than expected - likely the unemployment rate is going up because people who previously gave up looking for work are now back at it again. The market is rallying and Europe seems to be very committed to keeping themselves together.

Things seem to be looking up all around.

[Billy Cox]

It's a crazy world. This morning the unemployment report showed that the unemployment rate is up (population growth was more than job growth). As a result, the DOW is up 2% over yesterday. I have just one word "irrational."

I agree that the market is often irrational. If it was rational, we wouldn't need circuit breakers to halt trading in the event of a panic.

[Wilson Deaton]

It's a crazy world. This morning the unemployment report showed that the unemployment rate is up (population growth was more than job growth). As a result, the DOW is up 2% over yesterday. I have just one word "irrational."

CNN is reporting the story this way:

NEW YORK (CNNMoney) -- Stocks rallied Friday as a stronger-than-expected July jobs report helped lift markets for the week. ... The U.S. economy added 163,000 jobs in July, an improvement from an increase of just 64,000 in June, according to a government report. Economists surveyed by CNNMoney were predicting 95,000 jobs were added last month. "It was the perfect number for the market," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

One man's "bad unemployment report" is another man's good jobs report.

Wilson

[Jim Chabot]

Doug, I heard the same report. It doesn't make sense to me. I think sometimes the media tries to provide a reason to actions which are irrational.

A short time ago, you had attributed a rise in the market to investors confidence in Romney's chances in the coming election. Is it plausible that this reasoning continues? I'm thinking that the jobs numbers while better than expected are still pretty bad, and I'm thinking that the President's only chance at re-election is an economic turnaround, the closer we draw to November, the less chance he has.

Just thinking out loud, I don't have any idea how and why the market responds.

[Dale Cozby]

The DOW finished the day I was born at 784. Today it closed over 13,000 An increase of 1658%
Average new car cost 3,200 today it is $30,748 and increase of 960%
Median wage in the USA was $5,780 a yr. Today it is 26,364 an increase of 456%
Median household income was 6,200. Today it is 50,020 an increase of 806%
Median income of college grads was 9,700 today it is 34,510 an increase of only 355%
A new home average cost was 12,450 with an interst rate of 6% today it is $273,900 or an increase of 2200% with an interest rate of 3.49% a decrease of 42%.
Inflation that year was 1% last year it totalled 2.93%
Less than 12% of households had income under $3,000 or under 50% of the median. The average cost of a GP doctors visit was $6.60 and 5.5% of all visits were free and 11% of prescriptions were given over the phone without a visit.(source dept of Health, Education and Welfare survey) Today a GP doctors visit costs $180 an increase of 2727% now free is the emergency room for indigents only.
Unemployment was holding at 5.5 to 6% that year. This year it is averaging 8.2%

So as a college grad then I could have bought: 3 new cars with all the options or bought a new house debt free in 15 months.
I could visit the doctor for the cost of 30 loaves of bread or 22 gallons of gasoline.
In the year I was born the official poverty rate was established that year and set so that 20% or the lower quintile was below the poverty line. It consisted of a rate 3 times the cost of food for a year for a poor family of four. That poverty line was $3184 per household of four. The official poverty rate now is $22,350 an increase of 701% or twice the rate of increase for a college graduate.
In 1963 over 70% of citizens had private healthcare insurance in some form, 29% of those getting medical care were below the poverty line that year even without government healthcare programs.
Today 29% of US citizens are qualified Medicare or Medicaid recipients But 15.6% have no insurance(don't qualify for government programs or can't afford private insurance) thus only 55.4% have healthcare insurance.

Now the question is are we better off since LBJ's war on poverty and the introduction of the Great Society or are we worse off as a nation.

[Billy Cox]

Now the question is are we better off since LBJ's war on poverty and the introduction of the Great Society or are we worse off as a nation.

Considering that LBJ left office more than 40 years ago, it seems illogical to suggest that any of today's economic metrics have any significant connection to Great Society programs.

If we were all so well off in the 1960s maybe it's worth noting that the income tax levied on so-called job creators was double what it is today. (70%+) surely you don't want a return to those rates?

[Pete Vecchi]

Considering that LBJ left office more than 40 years ago, it seems illogical to suggest that any of today's economic metrics have any significant connection to Great Society programs.

Actually, I believe that there is a real connection. Now before I say anything else, please note that I am not saying that this is the whole or even the main reason, but rather pointing out that it is a significant contributor.

Before Medicare was established as part of the Great Society, most people had insurance that was basically there in case of the need for hospitalization. When Medicare began, in addition to the hospitalization insurance it provided for senior citizens, it also provided "Part B" for other, non-hospital expenses. When Part B came into being, insurance companies started following suit, offering policies that covered non-hospitalization expenses. Little by little, these types of policies (both Medicare and private) began covering more and more things, and prices began to rise and rise.

Over the decades, the use of medical insurance has gotten so commonplace that if auto insurance was used the same way medical insurance is used, we'd be paying for oil changes with auto insurance.

[Billy Cox]

Actually, I believe that there is a real connection. Now before I say anything else, please note that I am not saying that this is the whole or even the main reason, but rather pointing out that it is a significant contributor.

Before Medicare was established as part of the Great Society, most people had insurance that was basically there in case of the need for hospitalization. When Medicare began, in addition to the hospitalization insurance it provided for senior citizens, it also provided "Part B" for other, non-hospital expenses. When Part B came into being, insurance companies started following suit, offering policies that covered non-hospitalization expenses. Little by little, these types of policies (both Medicare and private) began covering more and more things, and prices began to rise and rise.

Over the decades, the use of medical insurance has gotten so commonplace that if aut insurance was used the same way medical insurance is used, we'd be paying for oil changes with auto insurance.

With or without Medicare, non-hospital health insurance was inevitable. Preventative care is far cheaper than inpatient hospital care after all.

I agree that health 'insurance' is a misnomer. What other insurance does one buy with virtual certainty of filing a claim?

[Hans Deventer]

With or without Medicare, non-hospital health insurance was inevitable. Preventative care is far cheaper than inpatient hospital care after all.

I agree that health 'insurance' is a misnomer. What other insurance does one buy with virtual certainty of filing a claim?

Funeral insurance.

[Dave McClung]

Funeral insurance.

In the U.S., we call it "prepaid funeral" rather than insurance. It isn't insurance, but neither is health insurance.

[Hans Deventer]

In the U.S., we call it "prepaid funeral" rather than insurance. It isn't insurance, but neither is health insurance.

It took a long time, but I am slowly learning when to remain silent.

[Billy Cox]

Funeral insurance.

There is no such thing. People either prepay for funeral services, or they purchase enough life insurance to cover funeral costs.

[Billy Cox]

It took a long time, but I am slowly learning when to remain silent.

You get partial credit... Life insurance is actually insurance against untimely death.

[Hans Deventer]

There is no such thing. People either prepay for funeral services, or they purchase enough life insurance to cover funeral costs.

Trust me, Billy. I got one. It's quite common here. I wasn't pulling your leg.
The thing is that you both get paid the total expense if you die at age 20, or at age 100. So there is an element of risk, but obviously, everyone dies one day.