Friday, January 08, 2016

Ignore all of the screaming headlines

There is a fair amount of drama in the press this am re: the decline of the Dow so far this week.  Yes, it's off to the worst start for a year but that's just looking at 30 stocks in a random period based on a calendar date.  Don't fall for the click bait.

Once again it seems most of the interesting market action occurred overnight as China pledged more support for stocks (side note - intervention is not a healthy thing, but the markets love it for some reason).  However, later comments on a liberalization of the exchange rate caused the global rally to fade a bit.

In the US, it's all about the jobs report.  I have absolutely no clue how stocks and the world will react:

1) Weak jobs = weaker US recovery & lower stock prices?
2) Weak jobs = weaker US recovery & hopes for more Fed support & higher stock prices?
3) Strong jobs = a stronger recovery & less hope for more Fed support & lower stock prices?
4) Strong jobs = a stronger recover & higher stock prices?

I can assure you that every major financial media outlet has 4 stories prepared with each of those narratives and they'll just publish the one that fits the jobs report & subsequent market reaction.  My guess is that with the warmer weather jobs will probably come in higher than expected due to construction projects that never shutdown in Nov/Dec but that's just a guess.


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