Skip to Content
Investing Specialists

Unmistakable Signs of Strength in January Jobs Report

More important than the headline number were the falling unemployment rate, much higher-than-expected wage growth, and even upward movement in the number of hours worked.

Well, at least market performance was relatively equal across sectors this week, with no need for anybody to feel left out. Most equity markets dropped by 2%-3% for the week, commodities were down about 3%, and bonds gained as yield fell on the U.S. 10-year bond from 1.93% to 1.84%.

Whatever the headlines may say, we believe this type of performance suggests fears of slowing economic growth around the world. Fixation on daily oil price movement continues, too. At least when markets were focused on the Fed, the volatility was limited to a few days or a few months of the year. Almost daily announcements of one oil metric or another, as well as world markets for energy have kept markets gyrating from day to day. And some of this movement set off other program trades (rules such as sell stock when oil falls 5%) in other markets, and then momentum kicks in. It's a self-perpetuating process that has been painful to watch. First, predicting exactly how and when computer programs kick in is way beyond our capabilities. Second, for now, the market has lost its grounding in fundamentals and seems to care only about daily oil prices. Some posit that oil demand is sending implicit signals about economic growth. Oil traders may be good at many things, but forecasting economic growth is not one of them.