Greetings from Saskatoon, Saskatchewan where we are participating in the Cambridge House investment conference over the next two days.

The big news this morning was the release of the latest jobs figures from the U.S. Department of Labor and they are striking, to say the least as they appear to emphasize the fact that the presumptive U.S. economic recovery may indeed be in jeopardy.  The number of new jobs created was a paltry 115,000, continuing the trend of diminishing results over the past two months.  However, thanks to a statistical quirk, the Unemployment Rate actually declined to 8.1% during April.

The reason for this quirk is a decline in the number of those actively seeking employment as approximately 300,000 were removed from that number during the month.  Since the Unemployment Rate is calculated by comparing those actively seeking employment to those employed, this creates a lower Unemployment Rate, a number which clearly does NOT reflect the true state of the jobs situation.

Financial markets in the USA dropped sharply in early trading and by 7:15 AM PDT, the Dow Industrials had dropped about 100 points. 

We believe one of the biggest developing trends in the world in general and in Europe in particular is the growing public desire to abandon any austerity measures and for governments to “get the economy moving again” no matter what the cost in money creation or potential inflation.

One indication is polling in France where current President Nicolas Sarkozy appears likely to lose his position in this weekend’s election against socialist candidate Francois Hollande.  Sarkozy has been an ardent supporter of austerity and if he loses, that would be an indication of the public desire for change.

By coincidence, Greek voters are also going to the polls this weekend and many observers fear that the increasing level of chaos in Greece will lead to the advancement of fringe parties on both the ultra-right and the ultra-left, making it impossible to enforce agreements reached with those institutions which underwrote the recent Greek bailout.

Also, as noted recently, the economies in Spain and other European nations are declining rapidly, opening the political doors to pressure to revise austerity policies.

The situation is truly in flux, to put things mildly.

Among other recent headlines, we have noted:

China’s economy appears to be continuing its retreat into slow growth or even no growth.  China has just reported that rate of their economic growth for the First Quarter 2012 GDP declined by 0.8% from the previous year’s figures.

The trend toward nationalization in South America continues as both Bolivia and Argentina have announced measures to take over European assets in those countries.

Al Qaeda may not be as dead as some people believe following the death of Osama Bin Laden last year.  According to Seth Jones, a senior political scientist at the Rand Corporation, such beliefs may be premature.  Al Qaeda has recently increased their strength in Yemen, the size of its global network is growing once again and plans have been uncovered regarding future attacks on American interests worldwide, generated by cells in Somalia, Iraq, Yemen, the Saudi Peninsula and several North African nations.

New leader Ayman al-Zawahiri is growing in stature and it has been reported that Al Qaeda operatives are now required to swear personal allegiance to the new leader. 

Just as a sudden shift away from austerity could de-stabilize the world’s economic structure, we believe that an Al Qaeda growing in power could serve to become a factor in social destabilization.

We do indeed live in interesting times.

We remain concerned about the continuing weak performance in the mining share indexes during the past year.  The total losses are becoming serious as the chart continues to trend downward within a narrow declining channel.  We look forward to a breakout from this channel as a first indication that the downtrend might at last be abating.

As of 7:45 AM PDT securities markets continue to show weakness with the Dow Industrials and Canada’s TSX Index each down by about 130 points.  Gold and silver are close to unchanged on the session with gold near $1,640 and silver just above the $30 per ounce mark while base metals are also trading close to unchanged on balance, as are mining share indexes. 

In other markets, long term interest rates continue to decline, the U.S. Dollar is trading close to unchanged in currency markets and the price of Crude Oil has dropped by a sharp $3 per barrel to just under the $100 mark.

All quotes US$ unless otherwise noted.

Next Melman Minute scheduled for Monday, May 7, 2012