'Soft Landing' Crowd One Big Step Closer to Winning the Battle
Mike Zaccardi, CFA, CMT | Feb 06, 2023 03:08AM ET
WALL STREET WAS stunned Friday morning by the strength of the jobs market. While technology company layoffs have lately hijacked the fear-mongering media’s narrative, the truth is that the employment picture is quite strong.
With a 517,000 gain in net employment last month, along with ebbing wage growth, the “soft landing” crowd is one big step closer to winning the battle against the 10 straight better-than-expected monthly payroll reports. That trend is a job seeker’s friend.
Something would have to be truly wonky for the U.S. economy to be in a recession right now.
There’s a revealing chart from J.P. Morgan Asset Management that illustrates the point. Variables such as industrial production, and wholesale and retail sales data, suggest modest economic weakness. But inflation-adjusted personal income, growth in payrolls, and real consumer spending, all indicate the economy is in decent shape.
Source: J.P. Morgan Asset Management
Even more encouraging for investors is that the global economic tide may be turning for the better. Consider that there have been significant upward revisions to GDP growth forecasts in Europe and Asia over the past two months. A mild winter across the euro area has sent energy prices plunging, while China’s swift reopening is a demand driver for the world.
Does all this sanguine news justify current stock market levels? That’s always hard to determine. The S&P 500 now trades at a somewhat elevated 18.4 times forward earnings, according to FactSet.
What’s more, value stocks and some European indexes are already at all-time highs. The recent good news may bolster investor confidence. But this doesn’t seem like a time to be making radical portfolio changes.
***
This The Humble Dollar
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.