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The Employment Report for January proved to be a large miss with only 113K new jobs created vs 185K expected, and prior, revised from the low of 74K to 75K. The unemployment rate fell from 6.7% to 6.6%, but this is an unreliable level given how many people are off the employment rolls. Some cheered the fractional the better participation rate from 62.8 to 63. The bottom line was the report was much worse than expected and just plain bad. Despite Fed governor claims to the contrary, some believe the taper will stop shortly given this miserable report.
Consumer Credit rose sharply to $18.8 billion vs the $12.00 billion expected, and prior $12.4 billion. Revolving credit was sharply higher at $5 billion but Student Loans--a bubble--still comprise the greatest percent of the gain. The chart below shows credit rising while the debt-to-income ratio remains poor.
Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume. This is a tool that investors can use to shorten their search for suitable ETFs, without being dominated by typical high volume issues or leveraged and/or inverse ETFs.
Markets were sharply higher overall putting in the best two-day rally in four months. Everything rallied except for bonds. As I indicated yesterday bulls were determined to close what was a bearish week, green. They accomplished this with the exception of Transportation and Small Caps. Away from equities, bonds (TLT), and the dollar (UUP), other sectors did little.
Leading the charge higher was every sector that was down previously so there’s little point of posting a litany of these names. The only point I’d make is that Emerging Markets (EEM) in general underperformed.
Volume is still high as markets rallied, squeezing whatever shorts remained. Breadth per the WSJ was quite positive.
Below are chart presentations for daily top 5 ETF market movers, rising and falling, by percentage change in volume for each category. To permit better discovery inverse or leveraged issues are not included. Market movers are a tool investors can use to shorten their search for suitable ETFs, without being dominated by the usual high volume issues.
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Even though most Fed speakers this week expressed their commitment to more tapering it seems bulls didn’t get or believe the message. No matter the spin from bulls the employment report was dreadful. Some bulls had hoped the December employment report was just an outlier. Evidently such was not the case.
The data overall has been disappointing and earnings news overall haven’t been stellar especially when it comes to company revenues. We’ll only have a week or two of earnings left to analyze and most of this will come from retailers.
Measured by the DJIA we’re still down 5% on 2014. Emerging markets, with a brief rally, are still having problems so going forward what will help them? I think only a pause in tapering. We’ll be hearing from new Fed Chair Yellen next week and that should be interesting.
Economic data next week is highlighted by Jobless Claims, Retail Sales (Thursday), Industrial Production and Consumer Sentiment (Friday).
Let’s see what happens.
Disclaimer: The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotation's aren't predictive of any future market action rather they only demonstrate the author's opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com