Mixed economic data confuses economists but excites the bulls.
What Does it Mean?
Friday morning saw two important economic reports which showed quite a mixed result with the end result being stocks bid higher, yet again.
The US November payrolls rose 199,000 with the unemployment rate falling to 3.7%. Expectations were for 190,000 with a 3.9% unemployment rate. The data signals a stronger than anticipated work force which would normally be interpreted as a boost for inflation and therefore a negative on stocks, however at the same time, the University of Michigan sentiment data was released showing the one-year inflationary outlook sliding to 3.1%, down from 4.5% in November and the lowest reading since March 2021.
While the jobs data shook the market, the sentiment reading sparked a new round of buying.
Why Do we Care?
The bull market, which in our opinion started in January, continues to remain strong despite a majority of people moving out of stocks. As long as this continues to be the trend, our view is that stocks will continue their ascent. While we don’t encourage reckless buying, a diversified portfolio with exposure to a variety of asset classes, in our opinion, remains the proper way to most benefit from the rising equity prices.
Each week we will continue to monitor the inflationary data presented and as long as the downward trajectory continues, we believe the interest rate headwind should abate. As this transpires we’ll look for the economic engines to restart, particularly in housing. As we head into the New Year we suspect some pullbacks and bumps along the way, however will view them as opportunities rather than warnings.
Quint sat down with the folks from CNBC for a fun piece on semiconductor stocks.