Become a premium member now. Follow us on twitter and become a fan of ETF Digest on facebook .
Most investors were waiting for the December jobs report which would confirm the “happy talk” emanating from pundits, analysts and the Fed that the economy was growing. But what we got instead was a shockingly lousy employment report. The ugly details were only 74K new jobs were created in December vs 200K expected matched against prior 241K new jobs. Inside the numbers the unemployment rate fell to 6.7% which in itself was misleading and almost comical. This is all explainable as 347K “would-be” workers fell off the rolls making the total workers not in the labor force as 91.8 million. This means the participation rate is now only 62.8%, the same level as 1978. Taking all the data together, the real unemployment rate is a shocking 11.5%. As the charts (via Zero Hedge) below show only 34K of new jobs was full-time with the rest part-time or temporary workers.
How do bulls explain the dreadful Employment Report? They indicated it was December’s poor weather.
The report Friday destroys Wednesday’s ADP Report 238K new jobs. (I mentioned this wasn’t reliable in our Wednesday report) Since rising markets have been fueled primarily by Fed liquidity it stands to reason that “bad-news-is-good” again. So bulls could spin the data to mean Fed tapering should be off the table once again. Yes, the Alice in Wonderland scenario will continue. Even Fed Governor Jeff Lacker admitted, despite FOMC Minutes showing “…concerns over small-cap multiples…” the “Fed is reluctant to prick asset-price bubbles”. There you have it in a nutshell.
The Fed is already explaining reasons why another round of QE may be necessary—Obamacare. Again Jeff Lacker continued, “Expect a lot of turmoil in Healthcare Industry and the Fed will be watching Healthcare closely in next few years.
So bulls read the tea leaves as more QE ultimately meaning everything is bullish for equities even in a perverse way. Bloomberg summed things up in this way .
Stocks fell early and often but after considering the bullish implications closed green. Leading the way higher was Tech (QQQ) and the S&P 500 (SPY). Sector leaders on the day included: Gold Miners (GDX), Gold (GLD), Silver (SLV), Solar (TAN), REITs (IYR), Homebuilders (ITB), Biotech (IBB), Utilities (XLU), Transports (IYT), Small-Caps (IWM), Emerging Markets (EEM) China (FXI) Mexico (EWW), Bonds (TLT) and many others. Leading sectors lower were too few to mention.
Chart of the Day . From a daily chart view it appears Turkey’s Erdoğan may have regained control of chaotic conditions in the country. Note the completed LO indicator projecting sideways movement or a bottom.
Today we featured a short video on iShares 7-10 year Treasury Bond ETF (IEF ) from both weekly and daily chart perspectives.
Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume. This is a tool that investors can use to shorten their search for suitable ETFs, without being dominated by typical high volume issues or leveraged and/or inverse ET Fs.
Volume was light to modest as investors needed time to sort through the big unemployment report. Breadth per the WSJ was positive.
Follow us on twitter and become a fan of ETF Digest on facebook .