Victory Is Mine

Jobs report sends stocks and bonds up

Funny how these things work. We add the most jobs in months, so the stock market flies. We see unemployment tick up to 5.4%, and inflation is tame, so the bond market flies. This market really likes to selectively consider its data.

I voted for Bush and am pretty hard core conservative, but I get annoyed as hell when the administration and conservative economists try to play up the job market as if it's been spectacular over the past year. We're still far below where we've been in any other recovery in history, and the only reason unemployment is low is that so many individuals have simply dropped out of the labor force, making the rate lower than it really should be (i.e. assume there are 100 people in the economy's labor force and 10 are unemployed. Unemployment is 10%. Now assume 1 of those unemployed people drops out of the labor force as his job search has been so unfruitful that he now has thrown in the towel and is no longer looking. The calculation is now 9 unemployed people out of a 99 person labor force, for an unemployment rate of 9.1%. See how that works?). The US job market isn't awful - just ask Germany - but it's not fantastic. The broader economy is humming along relatively well, no doubt, but my point is jobs.

Anyway, given the market's schizo reaction to today's news (stocks up, bonds up) if you're heavily weighted in US assets, right now would be a pretty good time to dump some of those stocks and pile into a Pac Rim or European Value fund.

posted by Publius @ 9:08 AM