|Dow||-60.59 to 17,824.29|
|S&P 500||-7.05 to 2,055.47|
|Nasdaq||-20.70 to 4,744.40|
|10-YR Yield||+.123 to 1.938%|
|Gold||-$27 to $1,235.70|
|Crude Oil||+$1.53 to $52.01|
Chance of “Bloody Wednesday” From the Fed Increasing!
The U.S. job market is en fuego!
That’s the message from this morning’s stunning report from the Labor Department. It showed:
The economy created 257,000 jobs last month. That handily beat the average forecast of 228,000.
December’s reading was revised dramatically higher — to 329,000 from 252,000. Ditto for November, which went to 423,000 from 353,000. That means the last three months were the best stretch for job growth in 17 years!
As you might expect, the oil and gas drilling business is starting to see layoffs — with 1,900 jobs lost. But the retail industry added 46,000 jobs, while hiring in construction (+39,000), health care (+38,000), and manufacturing (+22,000) also came in strong.
Yes, the unemployment rate rose to 5.7 percent from 5.6 percent. But it did that because of the odd mathematics that go into the job report. Just over 700,000 Americans re-entered the workforce amid improving job-hunting prospects, meaning the rise is actually “good” news.
|Last month, America’s workers saw the biggest rise in average hourly earnings since November 2008.|
What about wages? Buckle up! Average hourly earnings soared 0.5 percent. That was the biggest rise in any month since November 2008! It pushed the year-over-year gain in wages to 2.2 percent, the most since last August.
Even the labor force participation rate ticked up to 62.9 percent from 62.7 percent. That indicator has lagged, and it still remains very low. But any improvement, like we saw last month, would be welcome.
Bottom line: We’ve seen several months in a row with strong job growth, and unemployment trending lower. Some people won’t take the numbers at face value. They’ve been saying for the better part of a year or two that every single government report is a complete lie, and I don’t expect that to change even if we have 20 more years of good data.
But whether you believe the numbers or not, they’re the figures that Federal Reserve policymakers follow. It’s hard to argue that zero percent interest rates make any sense whatsoever when official reports show our economy is churning out jobs at the fastest pace since the late 1990s!
|“I’m combing through sectors that have been beaten down to ridiculously cheap levels to find bargains that could be the next to surge.”|
So net/net, this report increases the chance of a “Bloody Wednesday” — where we come in on a Fed meeting day and policymakers catch the market napping by raising rates. That presents both risks and opportunities to investors, and it’s why I’ve spent a lot of time on this topic in my Safe Money Report. I encourage you to give it a try … before it’s too late!
In the meantime, what are your thoughts about the latest jobs figures? Are they as strong as they look? Why or why not? What are you seeing in your own backyard — is job and wage growth accelerating where you live? Or is it just more of the same “meh” environment we had in the first few years after the Great Recession?
Here’s the link to the Money and Markets website — go to “work” commenting as soon as you have time!
|Our Readers Speak|
What’s next for Greece? For stocks? For computer crimes? Those are some of the questions you stepped up to answer in the last 24 hours.
Reader Kevin weighed in on the European crisis, saying: “Greece shouldn’t have been admitted to the euro zone in the first place. They should return to the drachma, devalue the currency and watch the vacationers come back like crazy for the good deals.”
But Reader Steve H. thinks Greece isn’t the only country that’s going to be struggling with massive debt problems in the years ahead. His take:
“Greece is just the tip of the iceberg. Almost all countries have leveraged up in the past seven years and many do not stand a chance of ever repaying. The debt just keeps rolling over. Everyone knows the elephant is in the room. Today I went to 100 percent cash, the first time in my 50 years of investing.”
Speaking of going to cash and/or getting prepared for stock market trouble, Reader Billy weighed in with the following outlook:
“There’s nothing new with the stock ramp up of the last few days. Just short squeeze covering and nothing more based on Greek and other news being viewed as ‘favorable.’
“The long-term trend is DOWN for all the reasons we have discussed. That is, we’re leading a steady march towards deflation — and the next shoe to fall will by all the high yield junk subsidizing the energy markets.”
Finally, Reader Jim talked about the problems with data security in an interconnected, networked world. His view: “The only people not hacked are those who don’t know they have been hacked. What did we think would happen when we invented a machine that allows every miscreant on the planet to hook up to it? We are going to need two computers, one connected, one not. Buy Apple (AAPL, Weiss Ratings: A+)!”
Thanks for your thoughts! I agree that Greece should’ve been kicked out of the euro zone a long time ago, or never joined it in the first place. What I’m trying to figure out is whether it will finally be given the boot, and if so, how the euro will react.
I can make a case that after an initial shock move lower, the euro might actually rise. That’s because the currency would trade more as a “Deutschemark proxy” if the union’s weakest member were kicked out. Interesting times either way!
When it comes to stocks, I plan to just keep doing what I’m doing. Rather than make big, swinging, “all or nothing” market bets, I’m focusing on high-quality, highly rated stocks … in key sectors swept up in their own bull markets. And I’m combing through sectors that have been beaten down to ridiculously cheap levels (cough, energy, cough) to find bargains that could be the next to surge.
|Other Developments of the Day|
Don’t just take my word for it. The Fed’s unofficial mouthpiece, Jon Hilsenrath at the Wall Street Journal, says today’s jobs report will move the Fed closer to raising rates.
Another train accident, this time in Ohio, claimed two lives. Early reports suggest the driver may have driven past the crossing gates when they were down.
Meanwhile, in Taiwan, investigators said both engines experienced trouble less than a minute after takeoff. Authorities have confirmed 35 deaths, with 8 more passengers still missing and presumed dead.
The Ukraine conflict is heating up again, with hundreds of casualties mounting in that country’s east over the past few weeks. Leaders from Europe are flying to Moscow to try to get Vladimir Putin to ease off, while U.S. Secretary of State John Kerry is traveling to Kiev to discuss providing U.S. weapons to that country.
Thoughts on these topics? Come across something I didn’t mention, but you believe is newsworthy? Then head over to the website and let ‘er rip!
Until next time,