Let's see, everyone was hoping for a good employment report but instead we got a stinker and the stock market did what?!? Yeppers, it rallied. This is where logical and rational thinkers become lost like Alice. For us it's been "don't go down that rabbit hole", just stand aside and let Da Boyz have at it.
RBS economist Stephen Stanley wrote today's employment report was "a mild disappointment". It's easy to say with his firm and others, plied with cheap money from a generous Fed. And, that's really the issue. The liquidity bubble for Da Boyz is creating a stock bubble. Like all bubbles it will have an ugly end. But with cash and bond yields low, going for higher returns in equities is an easier; "make hay while the sun shines" choice. So, spin bad news and go for returns in stocks.
The weirdest thing about today was retail stocks leading markets higher. What will unemployed consumers shop with and where? Beats me, but companies like Macy's were upgraded today in anticipation of favorable holiday shopping data or at least a really good Thanksgiving Day parade.
Volume was light like all the dip buying we've seen over the past few months. Breadth was mostly flat.
Chucky the Consumer you can't kill must have another sequel left in him.
The previous week any hint of weak employment data sent investors scrambling to the exits. This week employment data was more than just "mildly disappointing". But with interest rates low, printing presses running overtime and cash piled in low yielding instruments any excuse to buy will do. Most rational bears were chomping at the bit to short this morning; but, before the ink was dry on their sell short ticket markets quickly stopped them out.
Other than Street upgrades of some select companies nothing much good could be discerned from today's news other than the end result.
Again
Jesse's Café Americain has the employment data well reviewed.
It seems bulls, and those who need to, are trying hard to prop markets here to the year end. This could mean a well managed trading range until then since there's a lot of fees and prestige on the line. Turning a deaf ear to poor news such as witnessed today is a signature of such an effort.
What's taking place in currency markets is a mystery but in short order we'll know the situation. Perhaps there is some central bank intervention in the works to prop the dollar. It doesn't work long-term but in the short-term it definitely hurts those leaning the wrong way.
Have a great weekend!
