If Crude oil Breaks Through $53, It’s a Screaming Buy

Dear Value Seeker,

America’s job losses have come into sharp focus again today.

The New York Times calls it a “rising tide.” It’s more like a tsunami…

Initial jobless claims for the week ended January 17 shot up by 62,000 to 589,000. This is the highest weekly rise in unemployment since November 1982.

Meanwhile, Microsoft ensured an abrupt reversal of yesterday’s stock market rally by warning that it was “not immune” to the recession.

The tech giant also announced it would give 5,000 workers their marching orders, including 1,400 today.

Microsoft joins a long and growing list of blue chips that have announced job cuts in 2009.

It’s a list The Wall Street Journal’s Real Time Economics blog is tracking:

*Company in liquidation

**Includes announcements of 2,400 cuts on Jan. 16 and 800 layoffs on Jan. 13.

***Number of employees affected by plant closures, not all will lose jobs

The official unemployment rate for December stood at 7.2%. A broader measure, which includes discouraged workers and those forced into part-time hours, stood at 12.8%

David Leonhardt in The New York Times says this is still not as bad as the 1982 recession… yet.

The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today.

But economies are a little like battleships. They turn slowly, and you can often tell where they are going before they get there.

So suffice it to say that the serious recent declines in retail sales, business spending and employment make it highly unusual that the economy will improve anytime soon. The job market will almost certainly continue to worsen for most of 2009. Even if the much-needed stimulus bill passes, the economy is likely to end the year in roughly as bad a shape as its 1982 nadir.

The nadir in 1982 was 16.3%, by the way… about one in six workers.

So brace yourself.

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There’s no doubt that President Obama has taken office at a critical time.

Unemployment is soaring, manufacturing is plunging, and the financial system is staring into an abyss.

All of these factors have led to an angry bear market.

But Andrew Snyder at Today’s Financial News says there are still some diamonds in the rough.

He picks the three best stocks to own for Obama’s first 100 days in office.

The Sovereign Society’s John Crooks says any currency that depends heavily on commodities for support is in for a tough 2009.

Global demand is weakening. And China’s slowdown looks to be even sharper than expected. This is bad news for resource-rich Australia, as export demand is expected to slump.

This, combined with further interest rate cuts, will cause the Australian dollar to plunge this year.

We talked about the “contango” phenomenon in oil markets in yesterday’s Hidden Value.

Today, Money Morning’s Keith Fitz-Gerald says investors can use this trend to make a profit.

Higher futures prices imply that crude oil will rise as the year progresses.

Keith says that means a chance to buy oil-related ETFs today at a bargain price.

For a safer option, Keith picks two oil transportation companies that pay healthy dividends.

Finally, Charles Delvalle, writing exclusively for Contrarian Profits, says market technicals suggest that light crude oil is primed for a bull run.

However, Charles says investors should play it safe and wait for a confirmation point for this trend.

If light crude oil breaks through $53, he says it will be a screaming buy.

Happy hunting,

Will Bonner

Publisher,

Hidden Value

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