Last Friday morning the government released its July payroll data. Going into the release at 8:30am ET, the market was on pins and needles: it was anticipating a huge reaction. The surprise, however, came from the fact that the estimate was correct for a change. Since there wasn't a huge beat or miss, the market didn't get its question answered as to whether the Fed would raise rates in September or not.
Bloomberg reported the following:
The numbers aren't spectacular but they're solid enough to keep a September rate hike in play. Non-farm payrolls rose just about as expected, up 215,000 in July with upward revisions adding 14,000 to the prior two months. The unemployment rate is unchanged at 5.3 percent. Wages show some traction, up 0.2 percent in the month with the year-on-year rate over 2 percent at 2.1 percent. The average workweek is up, rising to 34.6 hours from a long run at 34.5. The labor force participation rate, which dropped sharply in June, held at 62.6 percent.
Other details look surprisingly solid with payrolls rising 60,000 in trade & transportation, for a third straight strong gain, and professional & business services rising 40,000 to extend their long healthy run. Retailers continue to add jobs, up 36,000 for their third straight strong gain with the motor vehicle subset up 13,000 and reflecting the strength of car sales. Manufacturing, which is usually weak, rose a notable 15,000 in the month with construction, where lack of skilled labor is being reported, showing a modest gain of 6,000.
Another plus in the report is a decline in Janet Yellen's favorite reading, the broadly defined U-6 unemployment rate which is down a notch to 10.4 percent. If the August employment report a month from now looks this good, a rate hike at the September FOMC will be a lock.
There will be a lot of data between now and that August payroll information. And since the Fed constantly says that it's rate hike decision is data dependent, a lot can change until then and therefore, even a strong August report may not "be a lock."
Trade well and follow the trend, not the perma-bull OR perma-bear "experts."
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
The major averages finished the week off on a negative note. After plunging early on in the session, the major averages rallied into the close. While they did not rally back to finish in the green, they did make a pretty nice move off the lows. With a volatile week of trading behind us, we may see this rally leak over into today. Look for a gap...
Trading options in your IRA with "limited" margin can give you greater flexibility. Today let's examine a vertical bull put spread (selling a put spread) to see the advantage when you obtain the higher trading authority "limited" margining affords you. This strategy consists of selling a put at one strike and buying a protective put...
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