Sunday, May 06, 2007

April Jobs' Report Produces a Yawn

April Jobs’ Report:
The jobs’ report showed a low 88K jobs added compared to an expected, also low, 100K. This is the lowest increase in over two years and, to us, represents the underlying weakness in the economy coupled with the weak housing market.

March’s jobs’ number was revised slightly down by 3K at 177K. February’s number was right around the 90K mark so now we have had two months with jobs growth less than 100K this year. Don’t forget there is the other factor, the CES birth/death model, which tries to estimate the number of new jobs created by newly established firms (births). For April that number happened to be 317K which may be completely accurate but it does make one question the 88K number that was published.

This Week’s Fed Meeting:
The market certainly had a little thought in the back of its mind that the weak jobs’ report may encourage the Fed to be more giving, sooner rather than later, on the interest rate front. The jury is Not really out on this week’s interest rate move verdict. We are pretty convinced there will be no change in the fed funds interest rate this week.

Market Action:
The market’s reaction to the weak April jobs’ report was, as you might surmise, to buy stocks. The bond market seemed pleased with the modest job growth.

As the morning progressed, the major indexes we follow made new highs, which we have been expecting for about a week now. From the early Friday morning highs, the market sold off but not in the fashion we were looking for. And, there was the inevitable low created and then a little buying going into the close.

The Dow has now made 10 new record highs in the last 13 trading sessions. We are not exactly jumping for joy on this news. The market seems to have no trouble going up even with the underlying technicals not confirming the move.

News for the Upcoming Week:
Tuesday—Semiannual ISM forecast
Wednesday—FOMC meeting with interest rate decision
Thursday—Trade balance
Friday—Retail sales
Plus, first quarter earnings reports are still rolling in

Dow Industrials: 13,264.62 +23.24
VIX: 12.91
HUI: 345.91
QQQQ: 46.63
QQQRS: 0.40 bid
QQQRT: 0.65
RYVNX: 15.16
RYAIX: 20.41
RYCWX: 31.94
TLT: 88.60
BEGBX: 13.99

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