Where Are The Jobs?
Boy, that strong ADP Employment report sure was a headfake going into today's jobs report. The data showed that nonfarm payrolls increased by only 18,000 in June, well below estimates of 80,000 jobs. Private payrolls of 57,000 were also considerably less than consensus estimates. And the headline unemployment rate increased to 9.2% (from 9.1%).
Not much to say that is positive about today's jobs report. Hopefully this will be a wake up call to Congress that they need to get this debt ceiling issue passed so that we can remove some of the uncertainty that is in the air and foster an environment where corporations have more confidence to increase hiring.
The market is selling off on the news, but let's not completely dismiss the recent strength. Yesterday's retail sales figures were fairly strong, but the true test will be how corporate earnings fair when earnings season kicks into gear.
The flight to safety trade is on this morning, with the only things trading higher being Treasuries, the dollar, and gold.
Gold prices are up near $1543, while oil prices are lower to $96.75. The 10-year yield has fallen back to 3.03%. And the VIX is currently 5% higher to 16.77.
Trading comment: The market has been up 7 of he last 8 trading days, so profit taking today should not be surprising, no matter what the news. The market was also very overbought. So I expect a weak day today, and maybe even Monday as well. But I think those folks that are trying to put money to work will view it as a buying opportunity, and I don't think the selling will persist for too long.
Things in Italy are deteriorating a bit, and if the situation there escalates to the point where Italy quickly becomes the next Greece that could present a wildcard to my bullish stance. So that will bear monitoring. But for now I think the focus should be on stocks that recently broke out and may be offering nice setups in the form of pullbacks.