Without the benefit of reacting to the NFP report on Friday (with an open market) there is a great deal of anxiety in anticipation of Monday’s opening. I want to go over this with you so we can make something of it. First, take a deep breath with me. In – Out. Ok, now one more time. Great, now let’s move on.
To the jobs report. I’m sure you heard by now the NFP survey showed there may have only been 120K jobs created in the month of March. Clearly that number is a setback from the prior few months over 200K but is it really enough to panic? Recall just a few months ago when the expectation was for some 150K and we came in with 40K, which was revised upward twice to finish more than double.
Clearly the pace of job growth may have slowed this month but is that a reason to panic? Hardly so. The markets have enjoyed a nice ride up since Oct and the beginning of the year due to many factors, one of which includes employment. But selling this number? Oh, we all know there are a million reasons to sell and only ONE reason to buy. Maybe this is one of the million.
We didn’t hear/see many complaints over the last few months, right? That is because private sector job growth was good while government hiring had stalled (see graphic below for a breakdown of categories over the last several months). I suspect the fear being talked about was meant to ruin your weekend…if it did, then they won.
So, the headline number gets all the attention – and while it is disappointing the hype, hysteria and fear created are hardly worth the effort. Perception will be created from doubt and belief, and if you panic as you listen to the bearish sentiment from this report that is spewing out of every sewer – well, then you listened to the same people who created the ‘end of the world’ scenario back in early August.
You know what I’m talking about, right? The debt downgrade by S&P. Nine months later – how did that work out for those who ran away?
Bottom line, we have a market that is standing tall, earnings season just dead ahead, a seasonal time of weakness but let’s recall in 2009 the old mantra of ‘sell in may and go away’ turned into ‘sell in may, and you’re gonna pay’. Earnings season is upon us and tell me – do you want to be short or selling in front of earnings? While a pullback would be great to enter some new trades we will work on our timeframe and not the market.
Index Equity Correlation ($ICJ) is still rather low which means there are trading opportunities to be had. If the markets do tank on Monday perhaps we can use that as a chance to take advantage of others’ panic, which lasts moments and corrects soon after. How much money have you ever made when you panic?
I suspect the panic from this number will last about an hour or so into the day and then we move on. I have taken my breaths and already moved on.