Richard Russell continues:

“About 34,000 people enter this situation every month -- they are willing to do almost any kind of work, but there are no jobs.  The fact is that foreign workers are taking their jobs, they are highly educated, and willing to work for a fraction of workers in the US. 

I've often said that the big “changer” in prices is not earnings -- it's the price investors are willing to pay for earnings, in other words the price/earnings ratio.  Turning to the S&P, this composite is currently earning about $100.  Earnings will be about the same this year.

The S&P now sells at roughly 13-14 times earnings, and investors are becoming more bullish by the day.  The overall average P/E ratio for the S&P has run about 16 in past years, so if the S&P hits a P/E of 16 or better in 2012 it will be an all-time high (this is probably too optimistic).  A lot of analysts believe the earnings on the S&P will drop a tad next year (material costs are rising).

Then there's the unemployment picture, which is cloudy.  John Williams who publishes Shadow Statistics, runs the unemployment figures the “old way,” which is the more accurate way.  John figures the true unemployment rate is around 22%, and I believe it.  The unemployment rate for youngsters 18 to 25 runs nearer to 40%, and from what I hear if you're young you literally can't find a job.  If you're looking, don't bother with the US Post Office.

My view -- living standards will have to come down in the US if we are ever to get anywhere near full employment.

But what about inflation?  The Fed says that there is no inflation, that is -- if you don't consider the price of food and energy.  Of course, those of us who pay taxes, medical bills and college tuition have a different take on inflation, but figures can lie and liars can figure.”

Here is something else I wanted to pass along to the King World News audience.  My good friend Pierre Lassonde sent me a note letting me know where things stand right now regarding key events.  Pierre gave me his permission to share it with KWN readers globally.  It’s always helpful to hear from one of the great ones.

Lassonde is legendary as one of the greatest company builders in the history of the mining sector.  Here is a quick snapshot into the mind of Pierre Lassonde and how he views what is happening right now:

“Gold is doing very well.

The whole Greek bailout has been done to keep trouble out because both Sarkosy and Merkel have elections to fight.

However, the man on the street doesn’t believe that Greece will rescue itself and ultimately will fail to reform itself.

So they don’t trust the Euro, they don’t like US dollars. 

The Yen looks terrible as Japan is now running trade deficits, the first in 30 years and the Yuan is blocked.

Gold is the only thing left my friend and buy they do, by the tonnes....

Life is good...”

Remember, the great ones never panic.  People like Lassonde never let their emotions rule them.  They do their homework, stay on top of the news and they execute in their businesses and in their portfolios.

Special thanks to Pierre and for those who would like to subscribe to Russell’s Dow Theory Letters CLICK HERE.

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Eric King

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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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