Thursday, July 3, 2014
This is Mark Vickery, covering for Sheraz Mian while he is away
Following Wednesday's better-than-expected private-sector jobs
report from ADP (ADP), the Bureau of Labor Statistics (BLS)
countered with another solid jobs read for June: new job creation
for the month went up 288K, with an unemployment rate that has
fallen to 6.1% - that's the lowest number since September 2008, or
before the crash. In context, consider whether we wouldn't have
killed - or severely injured somebody - for numbers like these a
couple years ago.
Earlier months were upward revised as well: May jobs gains rose to
224K from 217K, and April's 304K revision marks the highest number
in more than 2 years. Professional and Business Services went up
67K, Retail +40K, Bars & Restaurants 33K, Healthcare +21K and
Local Government +22K. In other words, we're seeing
While the Participation Rate remains historically low at 62.8%,
these are numbers that are hard to argue with. Of course, with the
stock market being a forward indicator, what this really amounts to
is a justification of record highs recently established. That said,
economic strength is still way better than the opposite; we may not
see a huge pop in stock trading with the low volumes this week, but
there is little if any potential for stocks selling off at these
levels with such good news about the general economy.
So while taking some time off to vacation somewhere far away from
Wall Street in a week like this is almost always worthwhile, taking
a nap on the macro-economic narrative that has transpired over the
past few days is likely as mistake, especially if you are
suspicious about stocks maintaining their relatively lofty
valuations. The second half of 2014 is manifesting itself in-line
with analysts' bullish consensus; it indeed looks like time to feel
good about growth in America again.
So what's the next step? Business investment. With traction being
established in jobs data - and proven in the past two days - we may
see more involvement from corporations sitting on their huge mounds
of cash. Put into the system, we might expect even better jobs and
productivity numbers going forward. Which is exactly where we were
supposed to be in 2014, Q1 notwithstanding.
Feels good to be an American. It would anyway on the eve of
Independence Day, but it's even sweeter with a positive economic
narrative going into Q2 earnings season, beginning next week. Happy
Fourth of July!
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