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Jobs, Jobs and Jobs !

There was quite a bit of news about jobs this week. President Obama had its jobs summit this week to discuss and understand ideas on how to create jobs in USA. Here are some of my own ideas (in case President Obama is reading this blog:-)
  • Start infrastructure projects to fix roads, bridges and electrical grid and offer jobs to any qualified people who are willing to work. Put a special 10 cents tax on gas to cover the expenses for this program so it does not add to deficit
  • Give 1-2 year special tax-break to companies to bring back cash to USA from other countries. According to some estimates, companies have nearly $750 Billion parked outside USA. The tax-break should be given only if companies hire employees in USA
  • Give "cash-for-green-projects" (on similar lines as cash-for-clunkers). e.g. give 50% subsidy for residential solar installations. I am sure lot of people who otherwise would not consider solar installation would give serious thought
  • Give tax-credits for anyone who wants to get trained - more people gets enrolled in colleges to training, better it would be for long-run
I am sure readers of this blog also have quite a few ideas. Please post your comments on job creation ideas

Friday's job report brought some cheer with unemployment dipping to 10% (from 26 year high of 10.2%). It is definitely a good news if we see a declining trend. Based on forecasts, it may take 5 years to reach 5% unemployment. So how would it impact market. Here is my simple "DOW and Unemployment thumb rule"

Dow 10000, Unemployment 10% - both of these have reached an equilibrium in current economic conditions. My thumb rule is as follows:

For every 1% decline in unemployment number, DOW would go up by 1000 points.

DOW = 10000 + 1000 * (10% - Unemployment)

That means,
Unemployment 9% = DOW 11000
Unemployment 8% = DOW 12000 and so on

IMO, this rule would generally track well up to DOW = 15000. There is no scientific basis for this rule. But since markets are driven by people's behaviors, it is definitely based on "gut-feel"

So what stocks one should buy for Christmas - here are some past recommendations which are still "good buys": XTEX ($5.4), FIG ($3.90), SFI-D ($7.7), IRE ($10), AIB ($4.6), ING ($9.4)

Have a good weekend !

/Shyam

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