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Jobs Report: The Trend Is More Important Than the Number, Says Saut

Jobs Report: The Trend Is More Important Than the Number, Says Saut

The August payroll report due out Friday morning is set to be the biggest "What if?" moment the stock market has had to deal with in, well, a month, since the last cliffhanger morsel of data was released. Clearly the number is important, but the jockeying ahead of it, not to mention the nuanced hedging as to what exactly would be considered a "good" or "bad" or "in-line" result, and how each might affect the Fed's decision making on its proposed tapering plan, is bordering on the absurd.

"The markets don't really care about the absolutes of good or bad. The markets care about if things are getting better or if things are getting worse," says Jeff Saut, chief investment strategist at Raymond James Financial in the attached video.

Related: Strengthening Economy Trumps Weak Payroll Data: Paulsen

To that point, this veteran market-watcher says right now things are clearly getting better. While he concedes that a surprisingly strong headline number, above 300,000 for example, would be "one of the worst things that could happen," he thinks the resulting volatility would be short-lived.

Related: Avoid the VIX Trap; Too Many People Are Expecting Volatility

Officially, economists are looking for a light improvement in the headline job creation number this month, to 177,000 from 162,000 in July; the unemployment rate is forecast to stay at 7.4%.

For his part, Saut suggests avoiding the expectations game and trying to mesh your definition of what a good or bad number might be with that of the broader market. Instead, he recommends investors embrace some key realities like his belief that the Fed is unlikely to begin scaling back its asset purchasing program in September or October, and that an over-sold bond market could be in for a rally in the near term.

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