Wow! I feel a bit seasick. The steep fall of the Dow and now rapid ascension speaks to a market divided unto itself, true, but it also speaks to a market seeing past the headline news to a much brighter future.
- Nonfarm payrolls increased by 169,000 jobs last month, the Labor Department said on Friday, falling short of the 180,000 Wall Street had expected. In addition, the job count for June and July was revised to show 74,000 fewer positions added than previously reported.
Who cares what Wall Street expects? Okay, so Wall Street cares about its own predictive industry and most of the trading that happens derives from Wall Street traders, so, I guess they have a right to trade themselves up and down like a yo-yo.
The more important consideration is that the market fell and then rose strongly. Obviously, the bears like to get out in front of what they perceive is bad news, and, on the surface, the employment news serves the headline reporting well, but, one has to ask, how “bad” is the employment report? After all, the economy created a decent amount of jobs.
True, the government revised the previous two months downward, but that is “water under the bridge.” The market understands that. Remember, the market is always looking forward, not backward.
Okay, so the above is my take on today’s up and down move. The world of financial punditry has another take – the market acted like a seesaw because missing Wall Street’s expectations on the employment numbers suggests the Fed might delay the beginning of its planned QE tapering.
Me? I don’t buy it. Sure, a certain contingent of the market plays this angle, but, in the end, the long-term investors make or break the market and the long-term investors see it as I see it – the economy is still moving forward. And, and when you combine the recent positive global economic data with the fact the economy created some 170,000 jobs (more or less) in the month of August, the conclusion is that despite Syria and the “threat” of QE tapering (it is coming), the future is still brighter than not.
Even the G-20 thinks the future is brighter, albeit a bit cautious given the recent past and the fact that the emerging economies will suffer from a lack of liquidity in the global economic system, i.e., the forex markets will shift dramatically.
- The Group of 20 said on Friday the global economy was improving but it was too early to declare an end to crisis with emerging markets facing increasing volatility.
Keep in mind, the G20 is a group of countries that accounts for 90 % of the world economy and two-thirds of its population. Keep in mind as well that when it comes to economic cooperation, the united goal of this powerful group is global economic acceleration.
- The G20 achieved unprecedented cooperation between developed and emerging nations to stave off economic collapse during the 2009 financial crisis, but the harmony has since waned.
The “harmony has since waned” only on the political issue of Syria. Many nations don’t like what is about to happen because they fear the potential economic backlash. Think oil.
- Some analysts believe crude oil prices could jump more than 20 percent if a U.S. military strike on Damascus drags other countries into the Syrian conflict. “Our oil team thinks oil could go as far as $150 if we get the all-out scenario,” said UBS global macro strategist Ramin Nakisa.
Be that as it might. The possibility is there, yes, but will it happen? As always, we will see …
Trade in the day; Invest in your life …
