When the government, the University of Michigan, or the Federal Reserve releases data those who regularly use the benefits of TradeStops calmly read it and yawned. That’s because TradeStops subscribers don’t want to be controlled by their emotions or the constant onslaught of financial news. We are linking the connection between unemployment and stock market.
On Friday November 8th the Labor Department released payroll numbers regarding new jobs added to the nation’s labor force. Supposedly in the month of October 204,000 new jobs were added and the unemployment rates is now about 7.3%. The questions about this data include how many times will this number be revised and how many millions have stopped looking for jobs?
Many of these new jobs were lower-paying service sector or healthcare-related positions of employment. With last month’s government shut-down and the fact that around 14-million American are still out of work and looking to be hired, its hard to feel that the employment numbers were meaningful.
The reported number was about twice what was anticipated. The consensus estimate by analysts was between 100,000 and110,000 new jobs created. Something doesn’t seem accurate, and the anecdotal evidence is that the U.S. economy is still in recovery mode.
The kind of employment opportunities that comprise these 204,000 new jobs aren’t ones that increase discretionary consumer spending nor generate lots of new tax revenue either. The government needs tax revenues more than ever to cope with the nation’s phenomenal debt and budgetary deficit, exacerbated by new programs like Obamacare (The Affordable Care Act).
Part of the job numbers was due to seasonal positions opening up and part-time help for retailers and the food industry. This employment information might be the reason the stock market rebounded strongly on Friday Nov. 8th. After all, according to the Wall Street Journal, the average S&P upside in November and December after a big start to a year is 5.7%.
On Thursday November 7th a separate government report concerning third-quarter economic growth showed that consumer spending was at one of the most anemic levels since the economic recovery began. Many companies also reduced equipment purchases for only the second time during this nearly 5-year rebound from the start of The Great Recession.
Once again, this balances the picture that the good news of the latest employment numbers casts on the financial landscape. Fed officials know all this, and with consumer sentiment ebbing the Fed needs to hold the line of its QE4-Now plus its monetary easing.
The Reuters/University of Michigan Consumer Sentiment number for the end of October, which is a revised report, came in at 73.2. What is interesting is that the preliminary report was higher at 75.2, and Bloomberg had a consensus for the revision of 74.8. Thus this economic indicator was a disappointment and perhaps more of a realistic way of viewing the current financial conditions.
The reports showed that the current index was 89.9, with the expectations index down at 62.5. Unfortunately, that was lower than the preliminary reports of 92.9 on the current index and 63.9 on the expectations index.
In short, this sentiment measurement is lower on all counts. How much of it is a reflection of the government shutdown last month and the mood broadcast by the media is hard to ascertain. All we know is the fact that the indices are down translates to lower consumer confidence, and that can impact many sectors of the economy in the fourth quarter. The Federal Reserve knows this too.
The Permanent Open Market Operations (POMO) reports and recent comments by Fed officials including Janet Yellen indicates that the Fed is actively involved in its bond-buying program and other activities in support of the investment markets. Most analysts and investors see many reasons why the Fed will have to maintain the current levels of bond-buying and its zero interest rate policies.
“Together with the news yesterday of a stronger 2.8% gain in third-quarter GDP growth, [one would think that] the Fed now has the data to justify making its first reduction at December’s FOMC meeting, but whether it will or not is still unclear.
“Frankly, given all the flip-flopping, it’s hard to know exactly what evidence would satisfy the majority of Fed officials,” wrote Paul Ashworth, Chief US economist at Capital Economics.
No matter what the condition of the economy or the investment markets we need to be protected from our emotions. Fear, anxiety and even greed can cloud our discretion and tempt us to react to the financial news in ways that aren’t in our best interest.
That’s why TradeStops and TradeStops Complete is such a powerful part of an investor’s “arsenal”. When dealing with both the volatility of the markets and the emotional impact of the daily news stories, earnings reports and various economic data, we need a plan we can stick with. Receiving alerts from TradeStops helps us to follow through with our personal investment plans.
From the time we purchase a stock, ETF or an option, we need to know when to sell, how to minimize our losses and protect our gains.
With the “safety net” of trailing stop alerts with optimally-selected percentages following the direction of every position in your portfolio, you can use market corrections as prudent buying opportunities. Whether you’ve purchased the latest IPO like Twitter (TWTR) or a dividend-paying consumer products giant like Procter & Gamble (PG), you’re portfolio-tracking awareness will keep you mindful of what you own and how those positions are performing.
In summary, all the noise and the ups and downs of the investment markets are viewed as opportunities to buy and sell and nothing else when you invest using TradeStops. Emotions won’t get in your way and in time you’ll wonder why anyone would enter the markets without the benefits, disciplines and insights that you receive every trading day because you subscribe to TradeStops.