The People on the Bus Go Up and Down

When my children were little and we went traveling they would sing “The People on the Bus Go Up and Down” song. I couldn’t help thinking about this on Friday as October came to an end. During October the market was headed up and down each day. By the end of the month the DJIA was flat, the S&P 500 and NASDAQ had losses and basically nothing much had happened. The municipal bond market did take a bit of a hit during the month as interest trended up and the value of the bonds went down a bit. The announcement last week that GDP went up for the third quarter at a 3.5% annual rate, which was good news, was offset by the thought that this would not continue and was only because of “special Government assistance.” The good news that new weekly unemployment rates were dropping was offset by the total size of the number of people who are unemployed. The lack of new jobs was meet with the administration stating that if they hadn’t acted more jobs would have been lost and that they had managed to save about 650,000 jobs. It all seems to go back and forth. The real answer is that no one knows the real answer. It seems clear that new job creating is needed but the winter months historically are not good for job creating. If you go back to the 1973-1974 recession jobs did not turn up until March. With all of this said it would seem that the fourth quarter of this year may still look reasonably good. The Wall Street Journal reported this morning on their front page that “Jittery Companies Stash Cash.” They went on to point out that big businesses are hoarding money that they could be spending. They also noted the good news that many big companies have money available to hire people, when they are ready. Consumer spending is also down with the consumer also hoarding their money. It will take a sense of confidence in the government and the economy before all of this turns around. The upcoming holiday season may give us a clearer picture as to the confidence level. Ed Mallon