Despite What Wall Street Tells You, Actual Jobs Data Gives Fed No Reason To Slow Tightening

The Wall Street captured financial “news” media blasted us with the usual misinformation in the wake of Friday’s nonfarm payrolls report. The big guns of financial infomercialism blasted us with the notion that the reported gain of 155,000 jobs in November “missed” economists’ expectations. The consensus guesstimate was for a gain of 198,000. 

Here’s how CNBC put it:

Job growth falls short of expectations in November: 155,000 payrolls created vs 198,000 estimate

“Markets have high expectations for a December rate hike, but a slowdown in hiring in November appears to give Fed officials some room to slow down their hiking path next year.”

Of course, that was the seasonally “adjusted” number, which as often as not bears no resemblance to what actually happened. The seasonally fudged number is subject to 2 monthly revisions and 5 annual revisions thereafter as the statisticians fit the abstraction to reality over the next 5 years.

In the meantime, we can look at the actual data right now, make a few comparisons with years past, draw a few lines, and see reality as it currently exists, without waiting 5 years for the seasonal adjustment process to be completed.

So let’s do that and see what actually happened in November and what it tells us about the stock market

Weekly Bear: Here’s How To Predict When The Market’s Magic Hand Will Appear

The Wall Street Journal and other major media outlets reported late Thursday that the stock market reversed from crash to rally because the Fed had changed its tune on interest rate policy. The rationale was that traders started buying because the Fed will no longer stick to a schedule of ¼ point increases in the Fed Funds rate every 3 months. Instead it will take a “wait and see approach.”

As the Journal’s Nick Timiraos reported, the massive intraday rally was all the Journal’s doing. 

“But as they push up their benchmark, they are becoming less sure how fast they will need to act or how far they will need to go, and they want to assess how the economy is holding up under moves they have already made.

How they manage this new, less-predictable approach will depend in large part on the performance of the economy and markets in the weeks ahead.

On Thursday, the Dow Jones Industrial Average tumbled as much as 785 points before paring those losses. The rebound accelerated late in the session after The Wall Street Journal reported on the Fed’s evolving thinking on rates.

Aside from my usual LOL when reading Journal’s typical self-serving nonsense, as a technician I saw immediately why the market rallied when it did and where it did.

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