The Circus Comes To Town
Equities start the day higher as the circus comes to town. That’s right boys and girl, let’s peek under the Big Top and see what the April Jobs Report had for us! A three ring extravaganza of 223k jobs, a 5.4% rate, and 2.2% wage growth (YoY). But Michael, what do those numbers mean because they sound pretty good. Most of it was inline, we were looking for 228k jobs and a 5.4% rate, so spot on there. Wages however…that’s the key. Gundlach said it the other day at a presentation but wage growth is critical to Fed watching right now. They would be WAY more inclined to spike the punch bowl if wages started to meaningfully tick higher. The latest job report didn’t show that, the 2.2% YoY growth was slightly below expectations so stock futures reacted positively (perverse I know. Are we rooting against people making more money?). So as we take our seats to watch lions jump thru hoops and traders try to beat impossible VWAPs we need to ask ourselves one question: did this report change anything about our view on the market? To me it didn’t, the numbers weren’t rip roaring but they also weren’t terrible, which means the basic growth story is still intact. And honestly isn’t that the story of the past, oh I don’t know, 4 to 5 years? Good but not great. Like unsalted peanuts. But hey, it’s Friday, let’s look at what happened and then spend our precious time with family and friends (and especially Mom this Sunday!).
After the open we got the remix to ignition, hot and fresh out the kitchen, people buying like crazy, had every PM out there wishin’. (R Kelly in the recap? Feeling frisky today) Straight up price action from the get go my friends, up 1.2% in the first hour. Did you know today is the 70th anniversary of VE day? Well it is, and Europe celebrated by buying everything they could: DAX, CAC, FTSE, IBEX, all up 2-2.5%. The Tories won in England and just hearing that word makes me wish we had something better than Democrat and Republican. My friends across the pond have all the good English words. Chancellor of the Exchequer? Jammy Git? Brekkie? Love them all. Ok tell ‘em who the big winners were Johnny! Materials, Health Care, and Energy. Names like NRG, BOJA (I really like that song), SWN, RCL, BIIB, and DATA. Not a lot of losers to speak of, only NVDA, MNST, and CERN stand out. A solid morning of buying left us at 2,115, up 1.3%, just a few points from a new all-time high (I’ve written that 14 times in the past few months). You gotta give this market credit for being forgiving right? Bulls, Bears, both have won lately. All you have to do is wait a few days and eventually it goes you way!
Nothing happened in the afternoon and we’ve seen this kind of price action SO many times on Jobs Days. You get that giant rip in the first 20 minutes and then you may as well have gone home because its sideways the rest of the day. A close at 2,116 SHOULD make us happy but come on, how many times have we hit this level only to fall down again? I absolutely refuse to get excited about a breakout until we can laugh at 2,130. You know what though? We’ll take it. Anytime you go home with $SPX up 1.35% it’s a good day. And it’s the freakin weekend baby lets go have us some fun!
Final Score: Dow +134bps, S&P500 +134bps, Nasdaq +117bps, Rus2k +76bps
- Succinct Summation of the Day’s Events: Jobs report inline, wage growth a bit below consensus, you know what that means right? Let’s speculate on the Fed waiting a bit longer to raise rates…buy all the things!
- Like I said earlier, The recovery is the same as its always been
- Factset is out with another of their patented earnings updates, read it here: “the blended growth rate for Q1 S&P 500 EPS currently stands at 0.1%. This is down from expectations for ~4% growth at the start of the quarter, but much better than the (4.7%) seen at the end of the quarter. The blended growth rate for Q1 revenue is (2.8%), worse than the (2.6%) expected at the end of March. Of the 447 S&P 500 companies that have now reported Q1 results, 71% have beat consensus EPS expectations, below the 74% one-year average, but largely in line with the longer term trend. In addition, just 45% have beat consensus revenue estimates, below the 60% one-year average. In the aggregate, companies are reporting earnings that are 6.4% above expectations, nicely ahead of the one-year average positive surprise rate of 4.1%. Companies are reporting revenues that are 0.1% above expectations, below the one-year average positive surprise rate of 1.1%, but much better than the string of negative readings over the first few weeks of earnings season”
- A few of the Best Ideas from the recent SALT Conference. Guys like Chanos, Bass, and Cooperman.
- Some unsolicited advice for an upcoming Grad! This one is a must do: Live in a big city at least once, and not one you grew up in.
- What a toaster looked like in the early 1900s. I’m shocked these aren’t for sale in Brooklyn for $1000 a pop
- Still waiting on wage growth… Until solid evidence of wage inflation appears, expectations for when the Fed or the BoE will raise rates from record lows will keep getting kicked down the road
- Question: Is this a place in Game of Thrones or Oregon. Ill let you decide.
- Ledge to Ledge jumping is a thing? Really?
- Great quote in this article about Expertise vs Experience: I think financial firms would be wise to pay attention to the younger generation. As technology and forms of communication continue to evolve this group is going to be a huge asset to those who understand how to get the most out of them. Expertise in certain areas doesn’t always require decades of experience.
- You gotta make sure right?
I once again have two end links for you tonight! Im having trouble figuring out which one is better so let’s just use both.
The first is a double bicycle kick goal. Can’t say I’ve seen that before (or a video with this bad of quality in 2015)
The second is a bit old, but it shows some of the best surfing wipeouts ever. These look so painful, imagine how much you’d get tossed around.
Have a good night.