Friday, November 5, 2010

Jobs Report: Not Bad.

I have to be real quick today because I have a busy weekend planned.

Jobs report wasn't bad today.  151,000 new jobs were created last month which is way below what we need but hey it's a start.  Unemployment rate was unchanged at 9.6%.  That's less encouraging.

The market reaction to this news was interesting to say the least.  Dollar is up and treasuries are down which is not surprising because the jobs report was positive. Stocks are down which is a bit surprising.  Gold and silver are up slightly.

So why the negative reaction in stocks?  I think a couple things are at work here. 

1.  This solid jobs report puts a crimp into Wall St's QE party.  The Fed won't have the political cover it needs for a QE3 if the economy is improving.  If the recovery continues(which is unlikely in my view), we will have a serious inflation problem in a hurry.  The Fed will then be forced to raise rates and end the easy money party.

2.  Stocks are already at 2 year highs and very overbought. 

The Bottom Line

I still wouldn't be surprised to see stocks end in the green today.  However, the QE party that's rocketed the markets higher is now definitely in danger if the economy shows any type of growth like it did today.

I might not get back on today or tomorrow.  Have a great start to the weekend!


getyourselfconnected said...

Have a great weekend!

Peter said...

Why analyze make believe numbers? Wouldn't it be more fun to play "Guess the Revision?"

Enjoy your busy weekend.

Jeff said...

Thanks guys
Back on sunday!

Great to get away...m