06 Feb AN ECONOMIC AND VIRUS INDUCED ADVANCE
Will tomorrow’s BLS labor report confirm the incredible strength in the ADP Private Employment Survey? ADP indicated that in January private employers added the greatest number of workers since May 2015. The data was almost two times greater than anticipated. Moreover, and perhaps even more significant December’s data was revised higher thus indicating the strength might not be a one-off event.
The question at hand is whether or not this data will be discounted as it was “pre-coronavirus.”
Speaking of strength, Gallup reported yesterday that economic optimism is at a 44-year high, partially the result job market strength.
In my view the political implications of a strong job market are huge. Contrary to what some are writing, elections are all about the pocket book. Social issues have and always will be second tier. Employment is huge in so many dimensions from feelings of self-worth to security.
Psychology 101 states self-esteem is earned, not given. All remember their hardest teachers or toughest coaches. All feel good about oneself when something of meaning is accomplished.
I think society is at this point, that the majority is proud of their accomplishment, a key variable as to why the greatest proportion of Americans are optimistic in 44 years.
Commenting about yesterday’s market activity, equities rose on economic optimism and speculation that the coronavirus will be contained. Oil surged over 3% after falling almost 20% in five days.
Speaking of tumbling, Tesla declined over 17 % yesterday as most of Wall Street are struggling to identify a reason for the company’s incredible 6-day 60% surge, the vast majority came during the prior two days. Will the selloff continue?
Many years ago before all became technical analysts I was introduced to the 90/90 Rule. This rule states there is a 90% probability that 90% of a parabolic move will be reversed but the question is at what level? Is this rule still valid?
All must remember times are never different, there are just different people.
Last night the foreign markets were up. London was up 0.42%, Paris up 0.67% and Frankfurt up 0.74%. China was up 1.72%, Japan up 2.38% and Hang Sang up 2.64%.
The Dow should open nominally higher as China’s plans for tariff cuts on American imports added to optimism the global economy will weather the hit from the coronavirus. The 10-year is unchanged at 1.64%.