December 3, 2021
Good morning,
The November jobs data released this morning and the headline number fell shockingly short of expectations: +210k job gains vs +550k expected. The underlying data was not as bad as the headline and while all the data is interesting, it’s not going to move the needle of the market. Omicron is here, and we know it’ll affect growth, but today’s reading tells us nothing about how much. Markets are largely unchanged 30 min after the data dump.
Earlier this week I mentioned that the market’s discount mechanism would likely sniff out the broad economic effects of Omicron before epidemiologists would be able to define the variant’s many variables. I think yesterday’s market action was a big tell that Omicron, while significant, will not approach worse case scenarios promoted by news outlets this week. Yes, you could write-off yesterday’s rally as simply a partial bounce back following a sharp market decline. But yesterday’s market was led by a very wide margin by all the Covid casualties – travel, hotels, casinos, etc. The bloodless verdict of the market seems to be that this too shall pass – without shutdown.
Hope you have a nice weekend.
Be well,
Mike