Running Out of Steam

The markets waited with bated breath for the release of the NFPs. Or perhaps; post the anti-climactic stress test results, investors were simply looking forward to a number that hadn’t yet been leaked to the world, his wife and extended family. A better ADP on Wednesday had certainly taken the whisper number down from 600k consensus on Bloomberg. The folks on CNBC were talking about this being the last really bad jobs report. What about when the imminent auto sector job losses kick in I thought to myself? No matter, I guess the 539k number was probably in line with whispers and it would have been enough to lift us I believe, but the devil in the detail has weighed upon the market. 72k jobs were added in the government sector (census workers to be specific), having previously been -6k. There was also a -36k revision to the March report. Add them back in and the report was not “less bad” enough. The negative read has hit the $ post the report too, and has outweighed the buy $ safe haven trade.

I said on Wednesday I thought it was approaching the time to look at getting short of equities. We’ve got the event risk for the week out of the way now and I would now be starting to build a short. I feel we’ve had a period of exuberance, some better data to be sure and some clarity from the stress test (albeit in far from a doomsday scenario) and post a stellar Q1 for the banks, there’s hope they can earn their way out of trouble. The “buying time” policy of the Administration could actually work! Nevertheless, the market now seems to be questioning the economic data and not just blindly buying the good news. The secondary offers continue. Again, you don’t sell stuff when you think it’s cheap! DAX is right on its 200 day MAV and SPX not far from it. I believe, after a pretty impressive 2 month gallop that would’ve made Black Beauty proud, we’re running out of steam here.