Friends
We just got the non-farm payroll number (jobs number) and unfortunately it was very disappointing. The new job creation for August was zero. That’s right, we created no jobs in August and no matter how they spin it, it is not a good sign for economic growth in the second half of the year. Is recession inevitable now? Not necessarily, but as we have always pointed out over the past 2 years the most important determinant to confidence and long term economic growth is the creation of jobs.
The markets are now left to interpret the information and the first response is the bond market rallying with rates falling once again, and gold moving back up, as traders expect that the Fed will have to move towards a QE3 which would in turn weaken the dollar. The first response in stock futures is negative, but as the day unfolds we will see whether traders want to try to “game” the Fed by betting on QE3 or is the weight of the news just too much for stock traders to step in front of.
We’ll see how the day plays out and report to you after the close.
Have a nice day everyone.
