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What This Week’s Jobs Reports Mean for the Markets

Folks, this morning’s ADP number blew away street. Private-sector payrolls increased by 325,000 last month, far surpassing the forecast of 178,000. Now the expectations for tomorrow’s non-farm payrolls are even higher, but the range is still pretty significant—the projections are anywhere from 110,000-200,000.

Tomorrow’s number will be the real tell, of course, but it’s nice to see some improvement on the jobs front. I’d hoped we’d see growth like this sooner, but considering we’re living under regime that’s as hostile to business as just about any in U.S. history, numbers like today’s really tell me something about the real underlying strength in the American economy. My hat is off to the entrepreneurial spirit in this country—people have found a way to create jobs in spite of my fellow Chicagoan, not because of him. Just imagine what we could be doing with a free-market capitalist in the Oval Office!

Politics aside, the question on investors’ minds is: What do these jobs numbers mean for the markets?

Right now, there are a lot of portfolio managers who were pleased to see the ADP number reverse an overnight market that was down based on, you guessed it, news from Europe. So now they’re waiting to see what happens with non-farms before they make their move. If the numbers come in anywhere at or above expectations, I think we’ll see the markets react very well.

What we don’t want to see tomorrow is a market that opens the day higher and then breaks. That means portfolio managers are buying the rumor and selling the news. Pay attention to what happens after the announcement tomorrow—if we’re able to continue to grind higher throughout the course of the day, that’s a sign of real strength.
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