What Happened: Non-farm payrolls for February came in higher than anticipated. Total unemployment rose higher than anticipated. January non-farm payrolls revised lower by more than 100,000.

What Does it Mean?

While many may struggle to interpret this jobs data, if you dig a bit deeper into the report, the picture is quite clear. On one hand, the top line jobs number may insinuate the economy is booming however under the surface, the job creation was overwhelmingly found on the part-time side of the equation with full-time jobs actually decreasing by 187,000. Furthermore, the majority of jobs added were in health care and government sectors. Despite these data points, total unemployment ticked higher than anticipated which is a clear indication that the economy is in fact not booming but rather slowing and jobs are the final domino to fall.

Why Do we Care?

As we’ve stated for some time now, markets in our opinion continue to be held hostage by interest rates, controlled by the Fed, which are taking their cues from inflation data. While the inflationary data has been falling, the sticky piece continues to be wages and jobs which ironically the Fed wants to see soften before they lower rates. This morning’s data points to this precise activity transpiring and is why, in our view, stocks that are more sensitive to rates such as small caps, emerging markets or even Gold reacted positive to the news. In fact, while attention has been paid of late to the Magnificent 7 or maybe Bitcoin’s historic run to new highs, Gold has quietly been notching new all-time highs, and in our view, just getting started.

TC 2000 Charts – March 8, 2024

In our view today’s report further supports our thesis that stocks, in particular areas more connected to interest rates, continue to be in a very attractive position. Despite the economic backdrop that looks to be slowing and will eventually be a concern, we remain bullish and enjoying the run in the markets.

Eventually this eroding economic data will come home to roost, however, in our opinion this won’t happen until all the folks on the sidelines are sucked back in and the skepticism surrounding stocks turns to broad based optimism. It’s at that point we’ll become concerned.

Until next time

~ Quint


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