FRIDAY’S MARKET – Good Jobs News is Bad Market News
This day will without a doubt be dictated by the most important economic report in terms of market following. The monthly Employment Situation Report certainly deserves the attention today, as it came in astoundingly strong in a period that could have easily shown weakness on bad weather. Nonfarm payrolls and the unemployment rate improved far beyond expectations, which is good news about the American economy. However, that is bad news for investors, because it seems to push the U.S. Federal Reserve closer to interest rate hikes. We cover the market daily at our stock market blog at a level unmatched.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Economists and market strategists alike will be focused on one data point Friday. The most widely followed economic report has been released, the monthly Employment Situation Report. It was better than expected for the month of February, but remember, good news is bad news now because of how it affects the Fed’s rate plans.
Nonfarm Payrolls showed job creation of 295K for the frigid month, far better than what was expected at 230K. Though January’s payroll figure was revised lower to 239K; December was unchanged above 300K. Private nonfarm payrolls also beat expectations, marking 288K jobs created versus expectations for 225K. Again the prior month was revised lower to 237K. The unemployment rate improved to 5.5%, where economists thought it would improve to 5.6%, from January’s 5.7%. Labor force participation deteriorated, though, so there will be the usual debate about whether the unemployment rate really tells the story.
Nonetheless, the jobs data was clearly positive, where a negative report could have been blamed on the weather. While revisions may later come, today investors have to contend with the fact that the economy appears to be doing better than expected. That means the Federal Reserve could be backed into a corner and forced to raise interest rates sooner than even they might like to, given recent dollar muscle building. As a result of the super strong report, stock futures moved lower before the open and it looks like the SPDR S&P 500 (NYSE: SPY) will have a slow start to the day.
*Revised
Apple (Nasdaq: AAPL) is being added to the Dow Jones Industrial average, which I see as a positive for Apple and the Dow. For Apple, funds that track the Dow must now buy Apple, and so the stock rose 1.6% to start the day. The Dow, and the SPDR Dow Jones (NYSE: DIA) benefit because it is a price-weighted index, and Apple is sure to move the index with its superior price action to the company it replaces, AT&T (NYSE: T). The earnings day includes Staples (Nasdaq: SPLS) and Big Lots (NYSE: BIG).
Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
Sector Security
|
3-5-15
|
YTD
|
TTM
|
Vanguard S&P 500 (NYSE: VOO)
|
+0.1%
|
2.5%
|
14.1%
|
iShares Dow Jones (NYSE: IYY)
|
+0.2%
|
2.8%
|
13.1%
|
Fidelity NASDAQ ETF (Nasdaq:
ONEQ)
|
+0.4%
|
6.0%
|
15.8%
|
ProShares Ultra Gold (NYSE: UGL)
|
-0.2%
|
1.3%
|
-23.9%
|
ProShares Ultra Real Estate (NYSE: URE)
|
+0.6%
|
2.1%
|
39.3%
|
ProShares Ultra Oil (NYSE: UCO)
|
-2.1%
|
-14.4%
|
-75.5%
|
WisdomTree US$ Bullish (NYSE:
USDU)
|
+0.4%
|
3.3%
|
15.0%
|
iShares 20+ Yr. Treasury (NYSE: TLT)
|
-0.1%
|
-0.4
|
21.9%
|
Economic Report Schedule
Economists and market strategists alike will be focused on one data point Friday. The most widely followed economic report has been released, the monthly Employment Situation Report. It was better than expected for the month of February, but remember, good news is bad news now because of how it affects the Fed’s rate plans.
Nonfarm Payrolls showed job creation of 295K for the frigid month, far better than what was expected at 230K. Though January’s payroll figure was revised lower to 239K; December was unchanged above 300K. Private nonfarm payrolls also beat expectations, marking 288K jobs created versus expectations for 225K. Again the prior month was revised lower to 237K. The unemployment rate improved to 5.5%, where economists thought it would improve to 5.6%, from January’s 5.7%. Labor force participation deteriorated, though, so there will be the usual debate about whether the unemployment rate really tells the story.
Nonetheless, the jobs data was clearly positive, where a negative report could have been blamed on the weather. While revisions may later come, today investors have to contend with the fact that the economy appears to be doing better than expected. That means the Federal Reserve could be backed into a corner and forced to raise interest rates sooner than even they might like to, given recent dollar muscle building. As a result of the super strong report, stock futures moved lower before the open and it looks like the SPDR S&P 500 (NYSE: SPY) will have a slow start to the day.
ECONOMIC REPORT SCHEDULE
|
|
||
Economic Data Point
|
Prior
|
Expected
|
Actual
|
FRIDAY
|
|
|
|
|
|
|
|
-Nonfarm Payrolls
|
239K*
|
230K
|
295K
|
-Private Payrolls
|
237K*
|
225K
|
288K
|
-Unemployment Rate
|
5.7%
|
5.6%
|
5.5%
|
$-45.6 B*
|
$-41.8 B
|
$-41.8 B
|
|
$14.8 B
|
$15.0 B
|
3 PM ET
|
EPS Report Schedule
Apple (Nasdaq: AAPL) is being added to the Dow Jones Industrial average, which I see as a positive for Apple and the Dow. For Apple, funds that track the Dow must now buy Apple, and so the stock rose 1.6% to start the day. The Dow, and the SPDR Dow Jones (NYSE: DIA) benefit because it is a price-weighted index, and Apple is sure to move the index with its superior price action to the company it replaces, AT&T (NYSE: T). The earnings day includes Staples (Nasdaq: SPLS) and Big Lots (NYSE: BIG).
HIGHLIGHTED EPS REPORTS
|
|
Company
|
Ticker
|
FRIDAY
|
|
Big Lots
|
NYSE: BIG
|
Cheetah Mobile
|
Nasdaq: CMCM
|
Chimerix
|
Nasdaq: CMRX
|
Foot Locker
|
NYSE: FL
|
Furmanite
|
NYSE: FRM
|
Global Sources
|
Nasdaq: GSOL
|
Gramercy Property Trust
|
NYSE: GPT
|
KVH Industries
|
Nasdaq: KVHI
|
Monroe Capital
|
Nasdaq: MRCC
|
New Home Co.
|
Nasdaq: NWHM
|
Noah Holdings
|
Nasdaq: NOAH
|
OFS Capital
|
NYSE: OFS
|
Southcross Energy Partners
|
NYSE: SXE
|
Staples
|
Nasdaq: SPLS
|
Tribune Media
|
Nasdaq: TRCO
|
Vantage Drilling
|
NYSE: VTG
|
Verso
|
NYSE: VRS
|
Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Labels: Economy, Economy-2015-Q1, Jobs, Labor-Market, Labor-Market-2015-Q1, Market-Outlook, Market-Outlook-2015-Q1
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