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Hi Everyone,
A bittersweet jobs report released by the U.S. Bureau of Labor Statistics today shows that 850,000 jobs were added in the month of June, the best figure in 10 months and nearly 145,000 more than an estimate provided by Dow Jones. However, the unemployment rate actually ticked up from 5.8% to 5.9%, despite a prediction that it would go down.
Not sure about you, but looking at these headline numbers, I feel a lot like Dorothy from the Wizard of Oz when the Scarecrow told her that she could just go both ways. ... |
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The stock market, on the other hand, doesn't seem at all confused as to which way to go, as the S&P 500 has continued to zoom deeper into record-high territory.
As the great economist Mohamed El-Erian (who featured in a strange dream I had last night) said, these confusing numbers "will support the patient Fed narrative."
In other words, because we didn't learn anything concrete about the economy from the monthly jobs report, Federal Reserve officials are more likely to take less action at their meeting later this month.
Since the advent of quantitative easing, I've seen many instances where stocks have gone up on negative reports simply because it meant the Fed was more likely to stimulate the markets. In this case, they're getting the benefit of obscurity.
By now, analysts have just under a month to convince themselves how a Fed taper will actually be good for the markets. The mental gymnastics will be interesting to watch, but for now, there are 120 billion reasons for stocks to go up.
Have a wonderful weekend. |
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Mati Greenspan Analysis, Advisory, Money Management |
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