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With each economic release, our fears about the strength of the recovery seem to be confirmed. With more than two thirds of the economy stemming from the consumer, the ongoing weakness likely begins and ends with labor market. Last Friday’s report for July was uninspiring, to say the least.

The private sector added 71,000 jobs last month, not enough to even keep pace with population growth – while job losses in total were 131,000 (mostly due to the end of 143,000 temporary census jobs). The private payroll figure was below consensus expectations of 90,000 and far off the pace of the nearly 200,000 jobs gained in March and April. To make matters worse, June’s numbers were revised sharply downward as well, further highlighting the labor market weakness.

The unemployment rate held steady at 9.5 percent, but that does not reflect those that have given up looking or have taken on part-time jobs rather than continued to seek full-time employment.Read more...

Varying earnings reports have the market seesawing during this reporting season. While most companies that have released results have beat expectations (albeit lowered ones) from Wall Street, forward looking guidance has left much to be desired. With the job market showing little signs of life, and housing still depressed, consumers aren’t ready to open their pocketbooks just yet. Yesterday’s consumer sentiment reading of 50.4, below expectations of 51 and the lowest in five months, intimated as much.

Many of the poorer company outlooks have centered on diminished consumer spending. However, some areas of the market that you’d expect to be more resilient, like healthcare, haven’t exactly been burning up the track either. The reports out of the sector have been mixed, including those represented in the portfolio. In terms of drug use, the second largest pharmacy benefits manager and FundFinds portfolio member Medco Health Solutions (MHS), noted in its earnings call last week that they expect a slower uptake of generic drugs in 2011, than originally forecast. We weren’t too surprised by this admission, as the biggest drugs to go off patent (including this country’s top selling drug in Pfizer’s Lipitor) don’t become available for generic replication until later in 2011.Read more...

Swiss drug maker and Income Portfolio member Novartis (NVS) is on the verge of shaking up the market for multiple sclerosis drugs. The neurological disease, also known as MS, affects some 2.5 million people worldwide. It has a growing drug market, expected to reach $15 billion by 2015.

Late last week, an FDA advisory panel voted 21-3 in favor of Novartis’s Gilenia drug to be “generally recommended” as an initial treatment for MS. Gilenia would be the first pill used to treat the disease, whose current therapies are harder to maintain because of difficult administration and/or harsh side effects.

While the panel voted unanimously in favor of the pill’s efficacy and safety, it does not come without its own side effects, including heart, lung, and liver risks and infections. With these in mind, the panel voted to suggest a study of lower dosing amounts: 0.25 milligrams a day, versus the current 0.5 milligram proposed daily dose. The study, which Novartis says could take some five to six years to complete with 2,000 patients, can wait until Gilenia is on the market, according to the panel.

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