When you average December’s blowout jobs number, which few foresaw, with November’s weak number, which nobody foresaw, what do you get?
That’s right, nothing. The average of the two months isn’t materially different than the average gain of the past year, or the past 7 years for that matter. This was much ado about nothing.
But as the Wall Street Journal put it,
Strong U.S. Job and Wage Growth Provides Assurance on Economy
Employers added 312,000 jobs last month and 2.64 million in 2018, the best year since 2015
Wow! They sure were excited. It was a perfect excuse for them to be bullish, when I would have thought that more jobs would keep the Fed on a tightening path, which is bearish.
Fed Chairman Jerome Powell disabused us of that notion later in the day. In a panel discussion with his predecessors, Jerome went all soft hearted on us and announced that Fed balance sheet “normalization” (a euphemism for tightening) wouldn’t be on autopilot after all. Now that’s not the same as saying they would print, but the market took it as a gift, which it most assuredly isn’t.
Here’s why it isn’t, and what you should do about it.