What April’s Jobs Data Means for the Market

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Goldilocks in the Jobs Forest

The biggest data point on tap this week came early Friday morning before the opening bell, and it was the “official” April employment report.

The Labor Department reported that 223,000 net new jobs were created during the month and that the unemployment rate fell to 5.4%. Average hourly earnings increased slightly, 0.1%, but that metric was just slightly below expectations.

The immediate reaction in markets was a big move higher, and midway through the trading session, the S&P 500 had maintained that big early gain, trading up 1.25%.

SPX_050815

This report is what I call a “Goldilocks” jobs number, which means the data aren’t too cold and not too hot — but rather, just right.

But what, exactly, does this mean for stocks?

Well, it means that those who were worried about the negative spillover of the bad March jobs report got some red meat, and it means that those worried about the Fed hiking rates in June or even September also got some red meat. In other words, the job growth isn’t so cold that it slows down the economy, but it’s not hot enough to make the Fed take action anytime soon.

Moody’s Analytics Chief Economist Mark Zandi put the situation in perspective, saying, “I think this [April data] should help the markets out, at least (stocks) staying at these record highs for the next couple of months.”

I am not sure I agree with Zandi here, but he is an influential and astute market observer. If he thinks stocks are going to keep rising for the next couple of months, then there’s a good chance a lot of big brokerage firms are going to keep on buying and fulfilling Zandi’s bullish prophecy.

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While it’s important to get a sense of what the so-called “smart money” is doing, as that drives markets, I think it’s even more important to get a sense of what the individual investor is doing out there — and how he/she is feeling about this market.

I plan to do just that next week, as I will be in Las Vegas for the annual MoneyShow.

If you are planning on attending, I would love it if you come find me and tell me what you think of this market, what you’re doing with your money and what your concerns are going forward. Being able to tap into the current zeitgeist in the market from “real” investors is, I think, more important than reading what a Moody’s economist thinks.

So, if you would like to attend the MoneyShow as a guest of my publisher, Eagle Financial Publications, simply register for FREE by using priority code 038656 and calling (800) 970-4355 (toll free in the United States and Canada) or signing up online.

I hope to see you in Vegas, baby!

Clancy’s Wisdom

“The difference between fiction and reality? Fiction has to make sense.”

— Tom Clancy

Best-selling novelist Tom Clancy put things in perspective with this quote, pointing out that unlike fiction, reality can be both inscrutable and unpredictable. Always remember this when you’ve got money in the financial markets, because sometimes reality is the last thing that makes sense.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Weekly ETF Report readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

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In case you missed it, I encourage you to read my e-letter column from last week about April’s commodities surge. I also invite you to comment in the space provided below.

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