Impact of The Rotten Jobs Number

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Includes: DIA, QQQ, SPY
by: Roger Nusbaum

The jobs number printed on Friday appears to be rotten, plus rotten revisions to past months.

While I am glad for Jack Bouroudjian's happiness over the fact that the negative employment number is the best of all worlds, for me the focus is not to try to solve what this means but rather to think about what to do if this is recessionary.

First, if this means that the market is on its way to a normal 25% bear market decline, there will be plenty of time to react. Selling too much too soon is a big gamble that is not necessary.

Admit to yourself you will not get out at the top. Then look at past recessions/bear markets on BigCharts.com or in your Trader's Almanac and you will see there was plenty of time to get out.

I do not know at this point if the number will result in a panic in the market - but if it does, it will be like every other panic; it will have some snap back before anything else.

Again, regardless of the news and the reaction just stick to whatever you devised to take defensive action (if you have been reading this site for a while, hopefully you have devised a strategy and are not flying by the seat of your pants).

So will the Fed cut by 50 basis points on September 18? Maybe sooner?

I don't know the answer but this does raise a question that, depending on the answer, means they will not go 50 basis points.

What happens if they go 50 basis points and then next month they revise today's number up to something like 50,000 job gains - while at the same time they revise last month's number back up too, then the fresh number shows some sort of meager gain?

That scenario is plausible; it's consistent with slowing but might not be as dire as some think it is today.

To be clear: I have no answers, just a question or two.