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Investing Specialists

Not All Labor Markets Are Dead

Though it is a special case, Google's pay hikes pour cold water on the theory that every labor market will remain weak.

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United States economic market indicators this week were few and far between, but the week was anything but dull.

The week opened with many G20 ministers, including China and Germany, criticizing U.S. quantitative easing as a thinly veiled ploy to drive the U.S. dollar down. Many openly feared the developing potential of either a currency or trade battle. Midweek, things started looking better as the balance of trade report showed improving deficit levels for September after a very bad scare in June. In fact, the trade number was positive enough that it now looks like the original estimate of 2.0% GDP for the September quarter will prove to be a few tenths of a percentage too low. Last week's surprisingly strong employment report bodes well for the same or better GDP results for the fourth quarter.

Building on the monthly employment report, weekly initial unemployment claims improved yet again, though I am a bit suspicious that a holiday-shortened reporting period may have helped keep claims artificially low. Then, just as thing were looking up, tech bellwether  Cisco (CSCO) laid an egg as the company meaningfully reduced growth estimates for the upcoming quarter, although expectations were met for the just-completed quarter. New concerns about the European debt situation, with a special focus on Ireland and Portugal, certainly did not help markets on Thursday, either.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.