NO HELP WANTED!

Conference Board statistics show that help wanted advertising is in the tank. Market seers discount the value of this information because jobs are now posted on the internet.

The numbers are still remarkably low and to some extend supported by other data. Job growth has been relatively tame thoughout this business cycle. As always there is a two edged sword ready to strike.

On the one hand, inflation will not be too strong unless the labor market is tight. Inflation is more important to your wealth than you probably appreciate. Stocks do well when companies earn substantial real returns. Periods when the inflation rate is high relative to interest rates are usually hazardous.

During the energy crunch of the 70's, making money in the market required good economic knowledge. Buy and hold investors who jumped into the market in 1970 did great for a couple of years. However, they were losing money by mid decade and even after 10 years they were up only 4%. The years of 77 and 78 were not bad years but they were wedged in the middle of down drafts.

At the same time, these were periods of big wage increases. It took thousands of workers to build all the nuclear power plants. Real interest rates could never seem to catch up. By 1980, President Carter flailed away at inflation by weakly imposing controls on credit cards. The situation was a heck of a mess. Not only did the economy slow, the inflation rate did not! One of President Reagan's first acts in office was to do away with price controls imposed in Nixons term. As any free American should expect, the market then solved the energy crisis. A tough recession was required but the problems were solved.

The good news today is that we do not have price controls. The price of energy has floated high enough to increase production and to decrease demand. I receive my oil checks last week and they were up 80% year over year. It seems that the price is high enough to find ways for old depleated wells to pump a little more.

The passage of the highway bill and the energy bill means construction workers are going to be in demand again. It will take a year or more for many of these projects to get approved, designed and under-way. There are already 23 nuclear plants under construction around the globe. More good news is that several of these plants will come on line in the next year. The number of snow birds who will leave the north for Florida will be particularly high this year.

The point is that the markets are in better shape than the common perception and solutions to the oil crunch are multiplying daily. Also, President Bush is one smart politician. He has been routinely under-estimated. I suspect he will be a popular guy again leading up to the elections next fall. Good things will need to happen between now and then. Perhaps Mr. Greenspan will stop raising shot rates. Perhaps some troops will be on the way home. Perhaps the Strategic Petroleum Reserve will be topped out in a few days and energy rates will decline even while the terrorist fight.

Oil prices are having an effect on consumer confidence. The economy is going to slow. The important thing for you to know is that the stock market and the economy often go along different paths. In Bear Markets, corporate earnings are often very strong and vice versa. A slowing economy would be good news because long rates would stay low and Greenspan would be forced to keep short rates low. Stocks would remain cheap realtive to bonds and to real estate. This low inflationary environment also makes Gold a poor place to store value. We are back to real interest rates which means it cost real money to hold Gold.

No help wanted but unemployment claims are still moderate. The news stock investors need is that a lot of folks have been laid off from work!

BUY THE BULL! I CAN'T TELL YOU WHEN IT CHARGES AGAIN BUT THIS SIDEWAYS MARKET IS GIVING THE BULL THE TIME TO REST BEFORE THE NEXT BIG RUN!