Saturday, February 8, 2014

Market Bounce and employment numbers

Wow, what a nice bounce in Stocks. The markets have recouped half their losses in the month of January in spite a poor employment report. Maybe traders are hoping the FED will not taper their asset purchases yet? The question is, will this rally continue or will it fade and the selling return? I lean towards this bounce fading and the selling returning once the true state of employment sets in. Employers are not hiring and sales are not growing as robust as would be necessary for healthy growth, which is what the markets are pricing in.

The unemployment rate is down to 6.6%, which is a move in a positive direction. I don't trust the numbers though. I don't believe we had enough hiring in January to move the unemployment rate in the direction it went. The participation rate was not fudged with as well, which is how the rate fell in previous months. So I just don't trust this number. I know that in Southern California the employment environment has not improved. Few places are hiring, we are starting to see store closings once again, and more and more 18-24 year-old's seem to not be working. Things are not improving, so I don't trust the unemployment drop.

What do you think?