Happy Jobs Day! Ed’s Daily Notes for February 7th   2 comments

unemployed-job-interview(hat tip to Red Star Resume for the pic)

I decided to retire the jobs day banana cartoon for the handsome guy above. What do you think?

On to the news…

Bloomberg: European Stocks Advance Before U.S. Employment Report

In the U.S., a Labor Department report at 8:30 a.m. in Washington may show that employers in the world’s biggest economy added more than twice as many workers in January as in December. Payrolls probably rose by 180,000 workers, following a 74,000 gain in December, according to the median forecast of 92 economists in a Bloomberg survey. The unemployment rate probably remained at 6.7 percent, its lowest in more than five years.

I must admit, this employment report has me stumped. Yesterday’s bullish anticipation of it makes no sense. Was it a “buy the rumor, sell the news” move? Is the market anticipating a good report, which makes the Federal Reserve’s tapering moot? Is the market anticipating a bad report which could convince the Fed to quit tapering? Or did we just bounce off the 150 day moving average a few days ago, and the bull market is resuming? There are a lot of moving parts here that don’t seem to connect.

My best guess? The market is playing both sides. Yesterday’s solid move up was equal parts of playing this jobs report as “good news is good news” and “bad news is good news”. A good jobs report means the market doesn’t care about QE tapering, because the economy is improving. A bad jobs report means the Fed will be forced to end QE tapering, and possibly even reverse it. Either way, the market wins!

Except…Federal Reserve Chairman Janet Yellen will be appearing before Congress next Tuesday. If she sticks to her tapering guns after a bad report, look out below! But that is a concern for next week. Today, the market is in “win-win” mode. Meanwhile, tapering continues as planned. We have already seen the initial impact in emerging markets. As the world’s reserve currency continues to dry up on world markets, the impact will be felt on the world’s economy. How long before those effects reach American shores? And that is before you even consider what impact Obamamcare is having on American jobs.

Basically, this jobs report is unimportant, unless we get an exceptionally good jobs report. I would define “exceptionally good” as non-farm payrolls increase by 400,000 or more, the unemployment rate drops to 6.5% or less, and the participation rate increases. If we get all three of those, that means we are actually adding jobs, and not just playing number games with the statistics to hide the true unemployment problem.

Deadline: Jay Leno’s Final ‘Tonight Show’

Normally, I don’t delve into entertainment subjects in the daily notes. However, I would like to wish Jay Leno well. I saw his stand-up show twice, long before he got The Tonight Show gig. He is still the best comedian I ever saw live.

As for his final show, I have to give some credit to President Obama for the best line of the night:

“You made a lot of jokes about me over the years – I’m not upset,” said President Obama, announcing his appointment of Leno as “my new Ambassador to Antarctica. Hope you’ve got a coat funny man!”

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Posted February 7, 2014 by edmcgon in Economy, Federal Reserve, Humor, News

2 responses to “Happy Jobs Day! Ed’s Daily Notes for February 7th

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  1. Big miss on the jobs report and the market is completely shrugging it off? I’m really thinking about SPXU? What do you think ed?

    • Jeff,
      Unless Yellen comes in next week and says “I’m going to quit tapering now”, this market is delusional. They are having the liquidity sucked out from under them. They are kind of like the old “boiling frog” story.

      What do I think of SPXU? I’m not selling it, or SQQQ. It may limit my upside, but the downside is beginning to look mighty possible. I would advise holding enough of either or both of them to cover your long-term holdings (roughly about a third of your long-term holdings). Of course, if you’re in 100% cash, I’d just stay there for the time being.

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