The Employment Report, due out tomorrow may be one of the most important recent economic reports we have received in some time, for some not so obvious reasons.
Here is the set up:
- We are at the tail end of earnings, which have been for the most part ok to good (Consumer spending is an ongoing concern.)
- The Capital Markets have moved almost 10% from their July lows, in anticipation of good news; A good report would validate the market’s anticipation.
- It’s summer so a lot of folks are out of town, making for light trading and dramatic movement on little or no news.
- We are at “lines in the sand” levels for the markets i.e. The capital markets are at their most recent highs, but unable to move past (Think breaking the 4 minute mile.)
- Seasonally, August is not a great month, again mostly due to lack of headcount.
Confused yet? Don’t be, just expect a choppy ride!
Market expectations of a loss of 87k jobs is a reasonable hurdle and comes on the heels of a loss of 125k individuals last month.
What makes this report important is all eyes are looking for an improvement and capital market participants are wagering that the report is going to be better than expected.
Our best guess, no guarantees of course, anything short of a very good number tomorrow, and the Capital Markets will head into their cave for the remainder of the summer doldrums, through Labor Day, Sept 6, 2010.
The good news, we only have to wait a few hours to see !
Have a Great Day, from a wildly hot, hot, hot, Dallas Texas !