Today's NFP print, which came in at 114k versus 120k expectations, was initially well-received by the market, with S&P futures jumping around 5 points on the release.
However, this release also had something negative about it, in a weird way. You see, as I've said before, the market is in a quandary, with the Federal Reserve's money printing campaign pushing the market up, while the underlying economy without the budget deficits enabled by the money printing would present a much darker picture, with much lower profits and markets.
Now, theoretically the Fed's money printing campaign is conditional on unemployment, as measured by the unemployment rate, going down substantially. Indeed, a 7% threshold is usually put forward. And certainly, the threshold cannot be much lower than that, when NAIRU is estimated to be around 5%.
The weird negative
This 7% threshold is where the NFP release had its "weird" negative. According to the NFP release, the unemployment rate fell to 7.8% from 8.1%. So even while printing low employment creation numbers, the unemployment rate is drawing closer to the expected threshold at which the Fed will be compelled to stop printing.
And obviously, if the Fed stops printing, the market will drop. This could happen even while the lower unemployment number is the result of less labor market participation.
While the market has, for now, celebrated the NFP print, there are reasons to believe it was actually a negative number for the market since it brought closer the day when the Fed could stop printing and propping up things.
That said, as long as the Fed prints it produces a powerful, mechanical, effect on the market, taking it higher, as I've explained before.