Market Overview

A "Good" Jobs Report?

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On Friday, September 6th the monthly Non-Farm Payrolls report was released whereby it was revealed that 169,000 new jobs were created versus 178,000 expected.  Interestingly enough when the markets opened at 9:30 AM EST the markets went up initially.  So what happened?  Why did the markets view this as positive news?  Well the pundits were all over the map stating that the Fed will now have to rethink the idea of tapering in September, commonly called “Sept-taper”.  This idea worked until around 10 AM EST when it was revealed that Russian President Putin will not stop arms sales to Syria.  This did not rest well with US President Obama who immediately called a press conference and the Dow dropped by more than 100 points.

The Dow meandered in and out of positive territory to finally close down 14 points, the S&P was completely flat and the NASDAQ gained 1 point.  The question is who started the idea of tapering in September?  It certainly wasn’t the Fed but ever since the June FOMC meeting all we’ve been hearing about is when will they taper?  This entire summer has been one of attempting to guess when the Fed will Taper off Quantative Easing and I would venture to say that there are some pundits who still believe that the Fed will start to taper after the upcoming FOMC meeting to be held on September 17-18th

Back to the jobs report; as soon as the news came out some pundits claimed that more people stopped looking for work, especially the long-term unemployed.  In my mind this is pure hype and speculation.  Less people looking for work doesn’t negate the fact that 169,000 jobs were created and this did not meet expectation.  The fact is this so called “recovery” is the slowest on record and certainly has been a jobless one.  For most Americans who have lived thru other recoveries, it doesn’t feel like one.  I personally know many people who are unemployed and it isn’t because they volunteered for it when the pink slips came.  They haven’t stopped looking either.  The fact is simply this: the US economy isn’t creating enough jobs to bring the unemployment rate down substantially.  Famed Marketwatch reporter Rex Nutting has a different take; he believes we should focus on growing the economy and has written an article on the subject.  That article can be viewed at: http://www.marketwatch.com/story/why-is-gdp-stuck-at-2-low-wages-fiscal-drag-2013-09-06  in this article Rex attempts to explain why GDP is stuck at 2 percent and suggests that low wages are a reason why consumer spending isn’t more robust.  I agree with Rex, low wages are a key culprit as to why consumer spending isn’t more robust.  It would appear as though the powers that be: employers, big business, the “Smart Money” do not want higher wages and they actually like the idea of a jobless recovery.  Has anyone looked for a job recently?  The one thing you’ll notice is you have no room to negotiate.  The employer will tell you what the salary is, take it or leave it.  However if we had an economy that was growing at 5 percent or better and the unemployment rate was 5 percent or less, this scenario would change very quickly.  Does anyone remember the Clinton years when 23 million new jobs were created?  Clinton said in 1992 “if you want to resolve many of the problems that we have, you need a growing, thriving economy”. 

Unfortunately our political leaders in DC still haven’t quite figured this out.  President Obama has never run a business or ever had to meet a payroll.  He does try.  Two years ago this month he attempted to put thru the Jobs Bill and it was met nothing but resistance.  Even now in his second and final term he does not have the political will or muscle to push thru a full jobs bill.  He seems more concerned with international politics as opposed to domestic.  Well, we’re still waiting…

 

Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is a free, daily newsletter that discuses and teaches market correlation. Market Tea Leaves is published daily, pre-market in the United States and can be viewed at www.markettealeaves.com  Interested in Market Correlation?  Want to learn more?  Signup and receive Market Tea Leaves each day prior to market open.  As a subscriber, you’ll also receive our daily Market Bias video that is only available to subscribers.   

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Economics Federal Reserve Markets

 

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