WOW–What Job Creation!

In spite of my own skepticism with the various organizations (government and others) releasing jobs numbers it is hard to be negative on job growth.

266,000 jobs simply blew all predictions out of the water, and the last couple of months were revised upward.

Compared to the ADP report of +67,000 jobs in November the government number is simply crazy. Whether either employment report is correct is up for debate I suppose, but I learned long ago that guesses by forecasters are worth absolutely nothing. One thing is almost for sure–there is no recession in the near future.

The equity market are up about 1/2% on the news while the 10 year treasury is up about 6 basis points to 1.855%.

Contrary to previous employment reports we can’t say “this brings the Fed back in play”—at least if we take them at their word without inflation they will not hike rates–and certainly the employment report is not supportive of cutting rates.

18 thoughts on “WOW–What Job Creation!”

  1. Lots of good things can happen in an economy short term when you keep spending and printing money, never worrying about the day when the bill comes in.

  2. This expansion has basically rewritten every tenet in economic textbooks.
    In the middle of a trade war where the farm state economies are in severe recession, jobs are being created elsewhere.
    That FICO number is surprising as well, considering the number of bankruptcies is soaring.

    1. On an investment board I don’t get attached to either narrative. The goal is to figure out what is going on and adapt accordingly.

  3. Wow, anyone remember the days, oh maybe 3 months ago, when the coup conspirators in the media where predicting a recession was right around the corner. Just goes to show you can’t trust the media when they have an agenda to push.

    Glad the economy continues to hit on all cylinders

    1. The only people I’d trust less than the media are the Wall St analysts on CNBC. They’re only good for whipping up fear and greed among the masses (creating opportunities for the rest of us). Remember Tom Lee from Fundstrat calling for a “melt up” to end the year back in Fall 2018?

    2. One feature about recessions.
      Nobody realizes when one has started until after it has ended

  4. The average FICO score is also at a record 706 showing that people are improving their credit health during the upturn too. Not sure how that will effect the investments we all like, but I guess it means they will have more money to invest if they choose to do so, and that any payments they owe will be more likely to be made. The score was up for all age groups.

    1. It’s good for any investment tied to residential mortgages. Higher FICOs imply lower future mortgage defaults. I know it’s too risky for most folks here but I like the NYMT preferreds for a small, high yield position.

      1. Hi Landlord, I took a look at the NYMT stock.. also shows interesting technicals.
        Gracias y abrazo

        1. Pablo, not a fan of NYMT common stock despite the stability. Management is primarily interested in growing assets and will hit the common with a secondary whenever it gets significantly above book value. So the stock price never moves higher despite the very good fundamentals in the housing market. If you’re giving up the possibility of capital appreciation, you may as well be in the preferreds for much greater safety.

    2. Ironically, if you’re carrying debt and paying on time your FICO scores are generally higher than if you’re not carrying debt and paying on time. So a rise in average FICO score could simply be an indication more Americans are carrying more debt. This works as long as the economy is humming and wage growth exceeds inflation, but could become a problem if things change down the road. Rising auto loan delinquency and default rates this year are symptomatic of what could become a bigger problem for the US economy going forward. Cheap money is still the best lubricant though imo…Laissez les bons temps rouler!

      1. How true, Citadel… When we returned to the US in ’07 after living in the Caribbean for 11 years, we had no problem getting a mortgage even though they essentially had no recent history for us. However, fastforward to ’11 when we refinanced, we were turned down by the banks originally because we didn’t have enough opened lines of credit that we used, that despite paying off credit cards in full every month and never being late on the outstanding mortgage… So we were forced to open up another credit card and use it before they’d refinance…So, in other words, you’re a better credit risk if you’re more actively borrowing money from many more sources and owe more to more people or institutions than if you’re paying off everything every month and have no outstanding debts other than your just your existing unblemished mortgage… Go figure…

  5. Looks like the returning GM workers had a big impact on the jobs report.

    3.1% YoY wage growth is also welcome news for American consumers.

    The snow day is cancelled.

    1. Martin G–that has been my personal sentiment–but I have been proven wrong time and time again.

      1. I think that is still good advice. I have noticed a lot of my pfrds have pulled back from their yearly highs.

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