It was quite odd to see such a robust rally heading into what is generally one of the most volatile days of the month. Investors are clearly expecting a positive number. Analysts are expecting a decline of 175K jobs which is a drastic improvement over last months 263K loss. Of course, if you recall last month we saw a 2% decline heading into the payrolls data and then a flat trading day on the day of the release. Analysts at JP Morgan are expecting a mixed bag with better than expected losses, but a higher than expected unemployment rate:
“the contraction in the labor market is expected to moderate in October as we look for a decrease in payrolls of 140,000, an improvement from the 263,000 jobs shed in October. The unemployment rate is expected to move up again, and we look for the rate to hit the psychologically important
10.0% level; we now anticipate that the unemployment rate will peak at 10.2% early next year.”
If today’s action is any indicator JP Morgan is likely spot on and the good news is already priced into the market.
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.