As we noted yesterday,
I am flipping from the usual bet of taking "the Under" on NFP. This month, I
will make the guess that the NFP exceeds the consensus of 200k.

Of course, the monthly initial number is fairly meaningless; What
matters more is the overall trend, how that trend compares to prior
recoveries, and what wage data looks like. The knee jerk trading
response is pretty silly, and can often be "faded" when excessive.

Since the Fed has stated they are now in that "Data Dependent Phase," the NFP numbers take on an even greater significance. A weak number will give hope to the "One & Done" crowd;  A too strong number might dash those hopes.

Instead of Fed obsessing, however, I’d like to point out a specific oddity about the recent trading action:

• Gold has risen to 25 year highs;
• Oil has rallied up from high $50s to near $70;
• Interest rates on the 10 year are approaching 5%;
• Equities have rallied to 5 year highs.

A friend has commented that "Equities are the odd man out;" Instead, I’d point out that this foursome doesn’t make a whole lot of sense marching in lockstep; Usually, Oil, Gold and Yields do not rally in concert with equities. So short term, I would expect this group to diverge — either Equities keep rallying and the other 3 back off, or vice versa . . .


UPDATE April 7, 2006 9:52am

My friend Brian Reynolds writes:

March NFP came in at 211k vs. the Bloomberg consensus of 190k. After revisions, the number was 13k below expectations, which is about as close as this number comes to consensus.

However, aggregate hours worked were strong, and revised up, so we would say this report is a slight beat, indicative of a strong economy with more tightening to come.

Category: Employment

Media Appearance: Kudlow & Company (4/06/06)

Category: Media

NYSUN: Bush Authorized Leak to Times, Libby Told Grand Jury

Category: Politics

Coming Soon: Big Birth Death Adjustments?

Category: Employment

Edges for Individual Investors

Category: Financial Press, Investing, Psychology

Q1 Performance versus Q2-Q4: Any Correlation?

Category: Data Analysis, Markets, Trading

We’ve Gone Trading Contests Crazy!

Category: Markets, Psychology, Trading

Giving the Fed Excuses for More Tightening

Category: Economy, Federal Reserve, Investing, Markets, Psychology

Chart of the Week: Monthly S&P500 Gains/Losses (7 year)

Category: Federal Reserve, Investing, Psychology

As Digital Sales Soar, CD Sales Slide

Category: Finance, Music