Job Growth, or Lack Thereof
Today, the Labor Department reported that there was no job growth for the month of August, and that the unemployment rate remained at 9.1%. Due to this disappointing news, stock markets around the globe took a hit. Within the Dow Jones Industrial Average, AT&T was the only stock that did not fall. Leading into the holiday weekend, this puts a damper on a week that saw the markets rally for four straight days.
While the media and politicians will probably pounce on this report and lambast President Obama, the job stagnation seen in August is likely due to the country’s debt crisis and continued negativity regarding the economy. Though politicians managed to reach a solution before the deadline, the debt crisis was an embarrassment and showed the ugliest of American politics. The fallout from this episode was a loss of confidence in the American economy, as Standard & Poor’s downgraded the US’s credit rating anyway. Given all the uncertainty regarding the economy this past month, it is not a surprise that nobody was hiring.
As President Obama prepares to deliver a proposal to help drive employment, one hopes that Congress will listen to him seriously and not repeat the back and forth antics that were so humiliating throughout July and August. As we were shown today, the perception of Washington and its leaders are vital to the health of the economy. Continued inaction by both the President and his detractors will continue to hamper growth.
On a side note, one interesting aspect from the report is that the black unemployment rate is as high as its been in 27 years, currently sitting at 16.7%. That is almost double the unemployment rate for whites, which is around 8%. Also, a staggering 46.7% of black youths are unemployed.
Introducing Bloomberg Markets Spotlight
Today, September 1st, marks a very exciting day for PrecisionIR Group and Bloomberg Markets magazine. We are proud to officially offer Bloomberg Markets Spotlight to clients and companies around the World- a website solely dedicated to connecting institutional and retail investors with today’s leading companies in an engaging, media rich and user-friendly platform. 
This exclusive opportunity allows over 355,000 savvy investors to learn about your company though the many interactive features, such as:
- Investor videos
- Investor conference presentations
- Earnings reports
- Analyst day highlights
- CEO interviews, and
- Corporate development overviews
Your company logo, ticker and much more will be posted on the homepage of the website and posted as an ad in Bloomberg Markets magazine. The month’s featured companies are promoted by e-mail and social media campaigns to the Bloomberg markets and PrecisionIR’s audiences, which include:
- Institutional Investors from around the world
- Investment bankers
- High net worth and professional investors
- Financial media
Ad space in Bloomberg Markets magazine too!
Demand is high and spaces are filling up for next month’s promotion. For more information, please visit http://www.bloombergmarketsspotlight.com/learnMore or contact Diana Taylor, dtaylor@precisionir.com.
Creating the perfect Annual Report
It’s time again for the very important process of creating your Annual Report. This daunting task can be, at times, a “tug-of-war” between those who will be writing the narrative section and those who will be completing the financial section of the report. It is important for the team to work together to produce an effective and accurate Annual Report, while considering the broad spectrum of investors who will ultimately be reviewing it. The following article, by Richard Ketchen, offers some hints for making this process run smoothly and creating a well balance report. Click HERE to read the full story.
Markets Sending Mixed Reaction to Washington Bickering
The deadline to raise the debt ceiling is less than a week away, yet Congressional negotiations are at a virtual standstill. The house is set to vote on John Boehner’s deficit reduction plan today; a plan that has no chance of passing the senate, and may not even pass the Republican controlled house. Yesterday, John McCain took to the senate floor to blast members of both parties on the stalled negotiations, even calling tea party members “hobbits” and their deficit plans “bizarre.”
While those criticisms certainly ring true, it’s unsettling to see this degree of bickering five days away from national default. Financial markets are starting to find it unsettling as well. The Dow suffered its worst single day drop since May yesterday, and yields on the benchmark 10 year US note spiked up to 3.01%. The yield rise created a rare instance where 10 year UK notes actually yield less than their American counterparts, demonstrating a continued search for non-treasury safe havens.
Monday Morning Links
A compilation of news from around the web.
Wall Street breakfast, from Seeking Alpha.
The lost decade for the S&P 500, from Seeking Alpha.
Moody’s downgrades Greece again, from CNN Money.
How much higher can gold and silver go, from Barron’s.
Oil drops below $118 as det talks continue to break down, from Reuters.
Research In Montion to cut 11% of its workforce, from Reuters.
Recent profiles with two Goldman Sachs executives, from DealBook.
Dunkin’ Brands plans to offer shares at a premium to Starbucks, from Bloomberg.
Chinese Internet Stocks: What’s love got to do with it?
Recent IPOs of American internet companies have been wildly successful. A study by Dealogic found that the shares of 43 tech companies that have listed since 2010 have risen an average of 41% over their offering price. However, Chinese tech firms haven’t had the same success. China holds massive potential for technology companies, yet the same study pointed out that the 23 Chinese techs that have listed since 2010 have only risen an average of 6%. One of those Chinese firms was jiayuan.com, the country’s largest online dating site. Though it gets lumped in with other Chinese technology companies, online dating is a business that holds incredible potential in the Chinese market.
PrecisionIR Makes Life Easier for IROs
Highlights include:
- Institutional targeting
- Social media publishing
- Social media monitoring
- Website analytics
Social media publishing
Ratings Agencies’ Continuing Conflict
As the US and Europe spiral towards debt disaster, the ratings agencies have, yet again, taken center stage. Moody’s, S&P, and Fitch have garnered significant attention from the market as they present their projections of the economic future for some of the world’s most important nations. The mere threat of a US downgrade from Moody’s and S&P spooked investors, and a downgrade of Portuguese and Irish debt wreaked havoc throughout European bond markets.
The continued reverence of the opinions from the Big 3 raters doesn’t seem to make much sense. Of course, the agencies can be sources of important economic analysis, and they do provide access to financial information that is otherwise inaccessible for most investors. However, time and time again, the ratings have proven largely to be inaccurate and reactive. During the financial crisis, it became clear that the raters had given their blessings to dubious mortgage backed securities without proper due diligence. Both Lehman Brothers and AIG had investment grade ratings right up until their respective downfalls. Even Enron remained investment grade until just four days before it declared bankruptcy.
Despite Congressional investigations and calls for reform, the fundamental flaw of the ratings agencies remains: they are paid by the companies and countries whose securities they rate. The potential conflict of interest is not hard to spot.
There is a fascinating interview in this week’s Barron’s with Sean Egan, the head of a lesser-known ratings agency with a different business model: the firm is paid by investors. Egan’s agency, Egan-Jones, provides a rather gloomy perspective on the economic future of the PIIGS nations. While only time will tell if his views pan out, it is refreshing to hear from a rater with no skin in the game other than providing quality research to investors.
Monday Morning Links
A compilation of news from around the web.
Debt talks continue to stall, from The Wall Street Journal.
Italy is the next European country with debt troubles, from The Economist.
Wall Street breakfast, from Seeking Alpha.
Gold tops $1,600 an ounce, from Bloomberg.
Meet the José Reyes of Wall Street, from The New Yorker.
Google provides an example for how the economy can be rebuilt, from Forbes.
News Corp. scandal cracks Rupert Murdoch’s shell of invulnerabilty, from Bloomberg.
2011: A Debt Odyssey
After weeks of deficit negotiations in Washington, Americans still haven’t seen any sign of meaningful progress. The debate has transformed into a public spat, characterized by stubbornness and political posturing. Democrats and Republicans continue to issue ultimatums and make public accusations that do nothing more than create further tension in an already tense discussion. Moody’s added another element to the drama, declaring that the US is on a downgrade watch, citing a lack of progress and the growing danger that a default may occur.
The Republican decision to attach raising of the debt ceiling to a large package of spending cuts is an unprecedented move. The debt ceiling has been raised 10 times in the past year alone, and not once was it used as a bargaining tool. This aggressive tactic has not only angered democrats, but alienated moderates within the party.
PrecisionIR on Facebook
Follow PrecisionIR on LinkedIn
