Superbowl Sunday and Ronald Reagan’s 100th Birthday!
Lange Financial Services- Sunday February 6, 2011 1:15pm
Employment figures released Friday were greatly distorted by the weather and seasonal adjustments. New hires were 36,000 with economists looking for an additional 100,000. Some 500,000 plus workers were no longer looking for work bringing the unemployment rate down to 9.0% from 9.4%. 1.2 million workers have left the labor force since November 2010. The labor force plunged to a 26-year low. According to Gallup on Friday, the real Unemployment rate is 10% and the Underemployment rate now stands at 19.2%.
More important is that strength in manufacturing and non manufacturing services job gains seem likely to reach or exceed 200,000 a month in the months ahead. Surging economic strength and a relatively low earnings valuation points to higher equity prices in the near to mid term.
Our S&P 500 objective remains 1550. Corporate earnings are running about 36% ahead of a year ago vs. an early estimate of 31%. Thus further upward earnings revisions seen likely in the S&P 500. We are currently at $100 for 2011 and $110 for 2012. Other well known investment firms are modestly below these projections.
We remain bullish. A fully invested position is still recommended viewing weakness as an opportunity to add or initiate new positions in quality stocks the months ahead.