We had one heck of a jobs report this morning. The numbers are bit more mixed than some are reporting, but the clear long-term trend is positive. Non-farm payrolls jumped to 290K while the unemployment rate climbed to 9.9% and U6 unemployment climbed to 17.1%. Unfortunately, I think Greece has drawn a line in the sand. There is now data pre-Greece and data post-Greece. Anything from the last month has to be thrown out the window in my opinion. If you’re running a major multinational corporation you have to take pause and consider whether this is really the time to ramp up capex. That means we could be in for several weeks where the data is simply not useful. That’s not a good sign for the markets. Technically, we are broken and fundamentally we are breaking.
There is very little doubt in my mind that governments will step in soon – particularly if the situation continues to deteriorate. Unfortunately, many of the persistent problems from the last few weeks are still alive and well. China is still deteriorating, Greece is obviously deteriorating and financial regulation might have gotten a huge leg-up yesterday on the back of the market crash. Will this market crash lead to a very harsh FinReg bill that tries to rein in what certainly looks more and more like a casino? It sure looks like things are starting to lean that way.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.