All the sturm und drang of crashing commodities is drowning out an underlying truth: More Americans are getting jobs and prices at the pump are going lower. This is bullish for stocks, according to Jim Paulsen, who joined Breakout from Wells Capital Management in Minneapolis.
While conceding that a 9 percent unemployment rate is hardly cause for celebration, the fact that the economy is adding jobs should be the focus for investors. Paulsen sees activity picking up in corporate America after the residual shock of last decade's meltdown in the financial markets. On the margin, which is where traders obsessively focus, the trend remains better for those watching the numbers from month to month. With April showing an increase of 244k in non-Farm payrolls, and revisions for prior months in the upward direction, the trend is still better, if only tenuously.
If you're looking for someone to to throw a wet blanket of negativity on the burgeoning fire of growth under equities, you should ask someone other than Paulsen. The investment strategist says the threat of the Fed raising rates is bullish, the logic being that this would be Bernanke and Co's first expression of confidence in the sustainable growth of the American economy in some time.
The flip side of crisis is opportunity. To Jim Paulsen, that means use any commodity selling spilling into stocks as an opportunity to buy. This seems counter-intuitive, but stocks are taking Jim's side of the argument, at least on a relative basis, as a flight out of the formerly "safe" precious metals seemingly buoys equities.
How does it all play out? Hey, we're all trying to piece the puzzle together and we want to get your take. Drop us an email at BreakoutCrew@yahoo.com, or take a moment to put a comment in the space below. As always, I'll be floating around to keep the game civil and offer my .02 cents (which now costs me only .019 cents, thanks to the dollar rally).