Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour mixed despite disappointing news. Since Monday the Standard and Poors 500 Index is up 26 points or 1% while the NASDAQ has gained 78 points or 1.2%. I’m increasingly asked how it is that the markets keep going up day after day, hitting new record highs on a regular basis, sometimes several times per week as volatility hovers at or near record lows. Frankly I don’t have a good answer despite following the markets closely for over 20-years. Most of my contemporaries, or at least the ones I respect, some of whom have worked in the financial markets for 50+ years are also equally mystified as to the markets behavior. At this juncture the two best explanations include divine intervention and central bank intervention. Of course both are extremely difficult to prove but the body of evidence certainly leans towards the central banks, including the Federal Reserve especially when one considers asset purchases or Quantitative Easing as it is known.
Compliments of the hurricanes the September employment report missed expectations substantially with a loss of 33,000 jobs as per the Bureau of Labor Statistics or BLS. This marks the first employment loss since 2010. The unemployment rate fell to 4.2%, average weekly hours were unchanged at 34.4, average hourly earnings increased .5%. The 3 previous months were revised lower by a combined 79,000. If I stopped here I could leave you with a fairly positive picture all things considered. But, some of the numbers in the report defy logic and my understanding of basic math. First up is the 906,000 increase in employment based on the household survey, this is the largest monthly gain recorded in at least 17-years. The .2% average hourly earnings gain reported for August occurred despite the two average weekly earnings sub-totals actually falling .47% as per Table B-3 from the BLS report. There are a number of other figures that don’t add up as well but the BLS assures everyone that they don’t need to.