The market opened with a bang – green all the way up to 80 or so on the Dow and then ….
- It’s not the news, but how the market reacts to the news that matters.
One would think the better-than-expected payroll report would, in fact, catalyze the market to the upside, but it seems to mean little to the market this day, at least through this writing.
- Nonfarm payrolls surged 236,000 jobs last month, the Labor Department said on Friday, handily beating economists’ expectations for a gain of 160,000.
- The jobless rate fell to 7.7 percent, the lowest since December 2008, from 7.9 percent in January. The decline reflected gains in employment as well as people leaving the labor force.
The fact that the market is less than enthused about the payroll data speaks to the issue of fatigue, market fatigue. The market has moved up substantially this year as mucho money has flowed into mutual funds. We’ve yet to see the “Great Rotation” from bonds to equities, but money is definitely flowing toward equities. With all that energy expended on moving all that money, and all that uphill climbing, the market needs a break. We will see how today ends up, but if it should be that the market reverses solidly, that would be a necessary break.
- Japan appears to have recovered from its recession after revised Q4 GDP numbers showed annualized growth of 0.2% vs. a preliminary reading of -0.4%. Private consumption and public investment boosted the economy, while a smaller-than-initially estimated drop in capital spending indicates that the falling yen may be easing corporate pessimism.
The above contributes to the media noise about a currency war, for sure, but putting the potential for WWIII aside (you know, nations drawing big guns over currency manipulation), Japan’s potential resurgence as a “revived” economic power is good economic news, which means it should be good news for the market. As I said, however, the market is getting tired from moving bags of money and trekking uphill. Then again, with the changing politics of Japan and the new stimulative focus of the Bank of Japan, well, things could get better quickly there and, at some point, the market will like it so much it will become reinvigorated, especially if the other good economic news continues.
- Lincoln Ellis of the Strategic Financial Group says the disconnect between stocks and bonds is getting more troublesome with every uptick, creating a market tension likely to end in tears for equities
A disconnect between bonds and stocks? Sorry, but I don’t get this. The Fed is pushing bond rates down to force money into riskier assets, such as commodities and stocks, right? The market is doing what the Fed intends, right? The bond market is showing no sign of rates rising, right? The Fed has pledged to keep rates down through 2014, right? Inflation is slightly below the Fed target, right? What is out there that will move the current bond-rate environment, other than the “Great Rotation,” which, as I said, seems benign at this point? Where is the tension?
One of the loudest voices of the perma bears is getting a platform again. The Great Roubini is now turning his “awesome” predictive abilities toward Europe, again. One would think after four years of predicting the collapse of the EU, the US economy, and the US stock market, the man, like the US stock market, would be tired, but, like the Energizer Bunny, he just goes on and on.
- Nouriel Roubini: Italy a ‘Tsunami’ Risk
The market often acts in unexpected ways. If one wants to stay on top of it, meaning having an idea of direction, one needs to have a broad understanding of how it works. In this light, think about the following words.
- I like to know all the different ways things work rather than just picking one way that does work and sticking with it.
Trade in the day; Invest in your life …
