Non-farm payrolls declined by 345,000 workers. It doesn't sound great but it is much better than the 500,000 job losses investors were expecting. Perhaps this is an indication that the economy isn't getting much worse. One month is never a trend but it is another sign that should draw additional cash into stocks.
The market has soared since March 9th and the economy has shown some signs of improvement to drive investment decisions. Oil prices have been rising and the yield curve is very steep. Both of those factors point to better times ahead. The employment numbers may drive stocks further but the world is far from rosy. It will be interesting to see how many jobs were accounted for by the government's guess of new business development. This adjustment can sometimes skew employment as fewer businesses may have been started which would also reduce the amount of jobs created. Perhaps the employment picture is improving, although still ugly, and the economy will bottom out in the next six months.
We remain skeptical as the consumer is still weakened; businesses have not seen growth; defaults on consumer loans are rising; corporate bankruptcies haven't peaked yet; commercial real estate problems are just beginning; and the housing market is still relatively lackluster. Stocks will continue to evaluate all these factors but we find it hard to believe that prices can go up at the same pace. There are too many economic challenges ahead to believe the bull market has started.
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