Well, that was awful. Or should I say, perfectly awful?
The August jobs report missed expectations pretty much on all major fronts. It also included some historic morsels of doom, and a general smattering of blah befitting a sluggish economy rife with uncertainty. But when you add it all up, it's just what the doctor ordered, presuming the doctor is a trader or running an equity fund.
In the attached video, my co-host Jeff Macke is able to make fun of my advanced age and the fact that I remember what was happening in 1978, which also happens to be the last time the labor participation rate was as low as it is now.
As bad as that is, and as structurally damning as it may prove to be longer term, this is a market that cares only about what today's snapshot of employment means inside the hairless head of Federal Reserve chairman, Ben Bernanke. The answer, of course, is that there's no way the Fed can proceed with its tapering plan this month and begin to scale back its $85 billion a month bond buying program.
While the immediate reaction was a relief rally, it did not take long before reality set in, as much as the likely deferral of tapering pales when compared to the broader theme of slow hiring, almost no wage growth, and an average work week that is stuck at just 34 hours.
Surely, a lot can still happen in the 11 days leading up to the FOMC's meeting September 17-18, but already such investment heavyweights as PIMCO's Bill Gross are standing by their guns and predicting that “Bernanke and company are committed to a taper," and will initiate it.
In the mean time, the super-cold bond market is getting a bit of relief on its own. This after the 10-year Treasury yield (^TNX) hit a 2-year high of 3.01% earlier today, before dropping back to below 2.90%.
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