Friends
We had a clue earlier in the week that the employment picture might be softening when the ADP private payroll number came in much lower than expected. Today’s non-farm payroll number confirmed the weakness. Instead of the 185,000 new jobs that analysts had estimated to have been created in May, we see that only 75,000 new jobs were created. In addition, the two previous months saw downward revisions, adding to the evidence that the overall employment picture is not as strong as we had previously believed. The unemployment rate remained at 3.6%, which is still good, but the wages continue to only show modest gains. Of course, all this led to carnage in the stock market- wait, hold on. I’m being told that the stocks were actually up for the day. That’s right, you know the drill – we’re back in the bad news is good news for stocks paradigm. The thought is that this week’s less than stellar employment numbers gives the Fed plenty of cover to lower rates sooner than later. Are market participants correct in their belief that the Fed will ride to the rescue? Hmmm…..
By the close, the Dow Jones Industrial Average was up 263 points to finish the day at 25,983. The S&P 500 was up 29 points to close at 2,873. Gold was down $2 to trade at $1,345 per ounce, while oil was up $1.58 to trade at $54.17 per barrel WTI.
It was a great week for the bulls. Despite the never ending confusion over trade tensions with both China and Mexico, the belief that the Fed will soon begin to lower interest rates was enough to bring out bargain hunters-given how stock prices had dropped over the past five weeks. If you have followed along over the past dozen years or so, you know we’ve always been a little uncomfortable with the bad news is good news narrative. But as always, we must trade the markets that we are given. We’ll be back at it next week. Stay tuned.
I hope you’ll allow me this one indulgence – LET’S GO BLUES
Have a great weekend everyone.
