Negative Effect of Jobs Report May Be Brief!
Saturday, April 7, 10:30 a.m. As long-time subscribers know, I have always referred to the Labor Department’s monthly employment report as ‘The Big One’. That’s because it’s the most difficult for economists to forecast, so comes in with a big surprise in one direction or the other more often than any other set of numbers. [...]

Saturday, April 7, 10:30 a.m.

As long-time subscribers know, I have always referred to the Labor Department’s monthly employment report as ‘The Big One’. That’s because it’s the most difficult for economists to forecast, so comes in with a big surprise in one direction or the other more often than any other set of numbers.

It therefore most often results in an initial kneejerk reaction to the surprise with a one or two-day triple-digit move by the Dow in one direction or the other.

However, as I also point out each time, the other side of that picture is that whatever is the initial direction of the reaction is usually reversed over the following two or three days.

There’s no question but what Friday’s jobs report was a downer. Combined with the negative surprises in other economic reports that had been looking so good for several months, including from the important housing industry, it provided solid evidence that the economic recovery is stumbling (as it has in each of the last two years once the Fed’s QE programs ended).

So when the market opens on Monday and has its first opportunity to react to the jobs report it’s likely to be to the downside, also indicated by the Dow futures being down 130 points in reaction Friday morning.

And what could possibly reverse an initial negative reaction to such depressing indications that the economy is stumbling yet again this year, over subsequent days?

In two words, the Fed.

The market stumbled recently when the Fed’s statement after its last FOMC meeting no longer included the phrase that the Fed was ready to step in with additional stimulus if needed. It stumbled again last week when the minutes of that meeting were released and it could be seen just how few Fed governors were in favor of providing more stimulus.

But don’t be surprised if the market reaction is particularly negative if Fed Chairman Bernanke is out quickly with a statement promising the Fed will indeed come to the rescue if needed.  

However, success in reversing an initial negative reaction may also be brief. The 1st quarter earnings reporting season gets underway in earnest next week, and unfortunately there were already concerns about the quality of those earnings, and the guidance companies may provide about the next several quarters, without the addition of the jobs report and its implications that the economy may be stumbling again.

Now the U.S. Charts are Beginning to Look Ominous!

I’ve been showing you charts of global markets, and marveling at the ability of the U.S. market to stand up in the face of the negative divergences between the U.S. market and most of the other major economies of the world.

But are the U.S. economy and stock markets now on the verge of rolling over to move in tandem with the rest of the world?

The jobs report added to negative surprises in other economic reports that had been looking so good for several months, including from the important housing industry, provides evidence the U.S. economy may be joining the global economic slowdowns in Asia, Europe, Brazil, etc. 

And in the stock market the short-term charts of the U.S. market are beginning to look ominous.

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To read my weekend newspaper column ‘Lousy Jobs Report Confirms Fed’s Suspicions!’ Click here.

Subscribers to Street Smart Report: In addition to the charts and updates in today’s premium content area of this blog, the new issue of the newsletter and a hotline are in the subscribers’ area of the Street Smart Report website from Wednesday.

Yesterday in the U.S. Market.

Markets were closed yesterday for Good Friday holiday. Market ended the week with a mixed day on Thursday.

The Dow closed down 14 points, or 0.1%. The S&P 500 also closed down 0.1%. The NYSE Composite closed down 0.3%. The Nasdaq closed up 0.4%. The Nasdaq 100 closed up 0.6%. The Russell 2000 closed down 0.3%. The DJ Transportation Avg. closed up 0.2%. The DJ Utilities Avg closed down 0.5%.

Gold closed up $16 an ounce at $1,628.

Oil closed up $1.84 a barrel at $103.30 a barrel.

The U.S. dollar etf UUP closed up 0.3%.

The U.S. Treasury bond etf TLT closed up 0.7%.

Yesterday in European Markets.

Most European markets were also closed yesterday and closed mixed for the week. The London FTSE closed up 0.4%. The German DAX closed down 0.1%. And France’s CAC closed up 0.2%.

Global markets for the week.

A mostly negative week globally, and once again more negative outside of U.S. as the negative divergence between U.S. and global markets continues.


THIS WEEK April 6)
DJIA13060- 1.2%
S&P 5001398- 0.7%
NYSE8081- 1.5%
NASDAQ3080- 0.4%
NASD 1002762+ 0.3%
Russ 2000818- 1.4%
DJTransprts5248- 0.1%
DJ Utilities458- 0.2%
XOI Oils1,243- 1.9%
Gold bull.1,628- 2.4%
GoldStcks165- 5.7%
Canada12103- 2.3%
London5723- 0.8%
Germany6775- 2.5%
France3319- 3.0%
Hong Kong20593+ 0.2%
Japan9688- 3.9%
Australia4402- 0.4%
S. Korea2024+ 0.5%
India17486+ 0.5%
Indonesia4166+ 1.1%
Brazil63691- 1.3%
Mexico39398- 0.3%
China2306- 2.7%
LAST WEEK March 30)
DJIA13212+ 1.0%
S&P 5001408+ 0.8%
NYSE8206+ 0.3%
NASDAQ3091+ 0.8%
NASD 1002755+ 1.0%
Russ 2000830unchgd
DJTransprts5253+ 0.7%
DJ Utilities459+ 1.4%
XOI Oils1,267- 1.6%
Gold bull.1,668+ 0.4%
GoldStcks175- 0.9%
Canada12392- 0.6%
London5768- 1.5%
Germany6946- 0.7%
France3423- 1.5%
Hong Kong20555- 0.6%
Japan10083+ 0.7%
Australia4420+ 1.4%
S. Korea2014- 0.6%
India17404+ 0.3%
Indonesia4121+ 2.0%
Brazil64510- 2.0%
Mexico39521+ 3.1%
China2370- 3.7%
PREVIOUS WEEK March 23)
DJIA13080- 1.2%
S&P 5001397- 0.5%
NYSE8180- 1.1%
NASDAQ3067+ 0.4%
NASD 1002728+ 0.6%
Russ 2000830unchgd
DJTransprts5217- 2.5%
DJ Utilities452- 0.2%
XOI Oils1,283- 3.0%
Gold bull.1,662+ 0.2%
GoldStcks177- 0.1%
Canada12465- 0.3%
London5854- 1.9%
Germany6995- 2.3%
France3476- 3.3%
Hong Kong20668- 3.1%
Japan10011- 1.2%
Australia4360- 0.1%
S. Korea2026- 0.4%
India17361- 0.6%
Indonesia4041+ 0.3%
Brazil65812- 2.8%
Mexico38334+ 0.2%
China2461- 2.3%

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Next week’s Economic Reports:

Next week will be a very light week for potential market-moving economic reports, but they will include the Fed’s Beige Book, the U.S. Trade Deficit, the Producer Price Index, and Consumer Sentiment. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

To read my weekend newspaper column ‘Lousy Jobs Report Confirms Fed’s Suspicions!’ Click here.

Subscribers to Street Smart Report: In addition to the charts and updates in today’s premium content area of this blog, the new issue of the newsletter and a hotline are in the subscribers’ area of the Street Smart Report website from Wednesday.

I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m.

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