Major averages rose on lower volume. The jobs reports continue to paint a 'Goldilocks' scenario in that they are strong enough, if the data are to be believed, to support the notion of economic growth, but not so strong as to cause rate-hike concerns. Wage growth remains subdued while jobs growth remains strong. The odds for a rate-hike at the December FOMC meeting stand at just around 50%.
Distorted jobs report and inflationary figures are nothing new. To argue that markets should be lower on these distortions which make things look far better than in actuality misses the point. The driving factor behind this aging bull has been quantitative easing. The amount of money printing remains at all-time highs. The European Central Bank and Bank of Japan have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized. This is the largest CB buying on record. Central banks print then use the capital to buy stock, thus stock markets are propelled higher. The low rates of interest make stocks that much more attractive than bonds further fueling the rally.
While major indices have corrected just a scant few percent so far this year, a "shallow floor" record of sorts, keep your stops tight as markets are certainly capable of correcting several percent or more as we saw in 2016. And as we have seen this year, when markets stumble just a couple percent, leading stocks often lose three times at much or more.
Market Lab Report - Premarket Pulse 8/7/17
|Published:||7 Aug 2017 09:25 ET|
Like what you read?
Let us help you make sense of these markets by signing up for our free Market Lab Reports:
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2023 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.