February’s non-farm payroll number came in at 236K, shattering consensus estimates on the street which was 163K — but, those estimates had moved higher — into the 170s — based on Tursday’s ADP report. This is a big number and a potential game-changer. Unemployment eased lower from 7.9% down to 7.7%. Construction jobs accounted for 150k of this total, justifying the recent talk that housing has bottomed. I look for new money, new buyers and many investors on the sidelines to buy into this market as a result. Yes, we could have a correction — but, unless it is a Black Swan event that surprises us — this market is going higher. There will be those who will begin to obsess that the Fed will move to end QE earlier than forecast as well as raise interest rates; but, I believe we’re still looking at this fall at the earliest before ending QE. Continued job growth throughout the summer will be needed before Big Ben and the Fed make a move. And, they will likely jawbone and use hawkish language well before they actually move — telegraphing their punches — so as not to spook the market/investors. If we can now get some kind of bipartisan agreement and address our long-term fiscal debt — through growth, spending cuts (entitlement reform), and tax reform — this could really be good.
History tidbit for Friday, March 8. On this day in 1913 the IRS began to levy and collect income tax in the United States. On this day in 1930, Babe Ruth signed a 2yr contract with the New York Yankees for $160,000. GM Ed Barrow wrongly predicted, “No one will ever be paid more than Ruth.” Have a great weekend. Will put out a note on Sunday. V/R, R.C. Porter.
- This day in baseball history: The Babe’s 1930 contract (thebaseballattic.wordpress.com)