Daily State Of The Markets: File This Jobs Report In The Goldilocks Category

|
Includes: DDM, DIA, DOG, DXD, EEH, EPS, EQL, FEX, FWDD, HUSV, IVV, IWL, IWM, JHML, JKD, OTPIX, PPLC, PPSC, PSQ, QID-OLD, QLD, QQEW, QQQ, QQQE, QQXT, RSP, RWL-OLD, RWM, RYARX, RYRSX, SBUS, SCAP, SCHX, SDOW, SDS, SFLA, SH, SMLL, SPDN, SPLX, SPSM, SPUU, SPXE, SPXL, SPXN, SPXS, SPXT, SPXU-OLD, SPXV, SPY, SQQQ, SRTY, SSO, SYE, TNA, TQQQ, TWM, TZA, UDOW, UDPIX, UPRO, URTY, USSD, USWD, UWM, VFINX, VOO, VTWO, VV
by: David Moenning
Summary

If it's the first Friday of the month, it must be jobs day.

In short, I think we can put this in the Goldilocks category.

Originally published January 5, 2018

If it's the first Friday of the month, it must be jobs day. The Labor Department reported that the economy added 148,000 jobs in December, which was well below the expectations for 190,000 new jobs. December's total was also below November's torrid pace of 252,000, which was revised up from the initially reported 228,000.

However, before you begin to fret that the economy has hit a speed bump and all is lost, it is worth remembering that on Thursday, ADP reported that private sector job growth popped by 250,000 last month, which was well above the Street's expectations for 190,000.

The next big number in this report is the Unemployment Rate, which held steady at 4.1% in December.

And finally, the stat that Wall Street is really honed in on is the annual increase in wages, which came in with a gain of 2.5%, which, while up slightly from last month's reading of 2.4%, is a bit disappointing.

The bottom line here is that just about everybody on the planet knew that the recent torrid pace of growth, which had averaged 232,000 for the last two months, would likely slow at some point. So, while the slowdown came a bit sooner than had been expected, the result shouldn't really surprise anyone from a macro point of view.

Speaking of the macro view, I think it can be argued that this report can be filed under the "Goldilocks" category for stocks. In short, the slowdown in jobs as well as the fact that wage growth isn't terribly robust means that inflation pressures remain subdued. Thus, those looking for an improving economy to drive earnings growth can go on about their business this morning.

Thought For The Day:

The easiest way to save face is to keep the lower half shut. - Unknown

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can understand why stocks are doing what they are doing on a short-term basis, we are not likely to be surprised/blindsided by a big move. Listed below are what we believe to be the driving forces of the current market (listed in order of importance):

1. The State of the Economy
2. The State of Fed Policy
3. The State of Earnings Growth

Wishing you green screens and all the best for a great day.