While the numbers were very good, the one thing I disagree with, is everyone keep calling it an 'earnings surprise.' Why was it a surprise? I think for the most part the fact that nonfarm payrolls are expanding by over 200,000 jobs every month was pretty much baked into the cake.
I don't see this number as unexpected. Expectations going in was for a number of 205,000. I personally would have been very surprised if we saw another number well beneath 200,000 again like August. I mean it was pretty clear that August was the outlier with all the noise. Yesterday confirmed what we basically already knew. Yes we did beat the 205,000 estimate handily, but we've averaged 213,000 per month for the last year and the 248,000 for September is not a record for the last year.
I would think that's baked into the cake. Cramer is saying that this shows that a recession is off the table, but for what market watcher was it actually on the table? I guess maybe some really believed it was but I didn't think so. At most, perhaps in time the weakness of Europe, the slowdown in China, the protest in Hong Kong, and the Russian-Ukraine conflict could drag us down but I didn't think that had happened yet if it happens at all.
So yes, the fundamentals of the U.S. economy remain strong. However, what we're focusing here is not the economy but the market. The equity market will fall hard if the economy falls into recession, but another reason you can see the market fall into correction mode is that valuations have gotten ahead of earnings. I don't know at this point whether they have nor not just that I think this fear has had more to do with the recent market weakness than a belief that the economy is now falling off a cliff.
It is a good sign that it didn't selloff on a good number which is what it did a year ago-on the perverse worry that good numbers meant the end of Fed accommodation. Still in reality the things that sunk this market aren't gone. We still have the Russia-Ukraine problem. I do see that Putin now has a challenger-a billionaire who wants to move power from the President to the legislature and the judiciary.
http://online.wsj.com/articles/putin-foe-mikhail-khodorkovsky-aims-to-remake-russia-1412383620?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond
I wonder if the market will notice and like this story. For now though we have Putin Problem and the selloff in commodities at least partly due to this-Saudi Arabia exacerbated it this week with their decision to actually drop oil prices. Many argue that the Saudis will finally have to relent as the price drops and drops-$80 oil is believed to be the bottom where if it were to drop below, would make it unprofitable for the drillers.
Only if and when that happens will the energy stocks be good again. Then we have what seems to be a big bear market in gold brewing. I'm thinking that shorting the gold ETFs could be a good play. Overall, we'll have to see if the market continues what it started Friday or that was just a one day thing-after the market had sold off a lot in the previous 9 days and as Art Cashin said, part of the rally was just relief that for one day, Europe looked ok after dropping so hard on Thursday.
What if Europe is down again next week. Overall, even if the market does come back it seems that we may have a little more volatility going forward and to win on the up side of stocks you may have to be a bit more strategic.
I don't see this number as unexpected. Expectations going in was for a number of 205,000. I personally would have been very surprised if we saw another number well beneath 200,000 again like August. I mean it was pretty clear that August was the outlier with all the noise. Yesterday confirmed what we basically already knew. Yes we did beat the 205,000 estimate handily, but we've averaged 213,000 per month for the last year and the 248,000 for September is not a record for the last year.
I would think that's baked into the cake. Cramer is saying that this shows that a recession is off the table, but for what market watcher was it actually on the table? I guess maybe some really believed it was but I didn't think so. At most, perhaps in time the weakness of Europe, the slowdown in China, the protest in Hong Kong, and the Russian-Ukraine conflict could drag us down but I didn't think that had happened yet if it happens at all.
So yes, the fundamentals of the U.S. economy remain strong. However, what we're focusing here is not the economy but the market. The equity market will fall hard if the economy falls into recession, but another reason you can see the market fall into correction mode is that valuations have gotten ahead of earnings. I don't know at this point whether they have nor not just that I think this fear has had more to do with the recent market weakness than a belief that the economy is now falling off a cliff.
It is a good sign that it didn't selloff on a good number which is what it did a year ago-on the perverse worry that good numbers meant the end of Fed accommodation. Still in reality the things that sunk this market aren't gone. We still have the Russia-Ukraine problem. I do see that Putin now has a challenger-a billionaire who wants to move power from the President to the legislature and the judiciary.
http://online.wsj.com/articles/putin-foe-mikhail-khodorkovsky-aims-to-remake-russia-1412383620?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond
I wonder if the market will notice and like this story. For now though we have Putin Problem and the selloff in commodities at least partly due to this-Saudi Arabia exacerbated it this week with their decision to actually drop oil prices. Many argue that the Saudis will finally have to relent as the price drops and drops-$80 oil is believed to be the bottom where if it were to drop below, would make it unprofitable for the drillers.
Only if and when that happens will the energy stocks be good again. Then we have what seems to be a big bear market in gold brewing. I'm thinking that shorting the gold ETFs could be a good play. Overall, we'll have to see if the market continues what it started Friday or that was just a one day thing-after the market had sold off a lot in the previous 9 days and as Art Cashin said, part of the rally was just relief that for one day, Europe looked ok after dropping so hard on Thursday.
What if Europe is down again next week. Overall, even if the market does come back it seems that we may have a little more volatility going forward and to win on the up side of stocks you may have to be a bit more strategic.
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