Friday’s employment report for May was just down the middle. On Friday morning at 6:00 am, the NYT posted an article titled, “Wall Street’s Ideal Jobs Gain: Middling.” I was quoted in it saying that the market would be happy à la Goldilocks with any payroll number between 100,000 and 200,000. The gain was 175,000.
The result was Goldilocks on steroids. The stock market tends to do best when investors are least concerned about the prospects of a recession. Friday’s numbers were reassuring because our YRI Earned Income Proxy rose to yet another record high. We derive it simply by multiplying aggregate weekly hours times average hourly earnings of total private industries times 52. It is highly correlated with wages and salaries in personal income and with retail sales.
Today’s Morning Briefing: Down the Middle. (1) Between love and hate. (2) Guidance from Hilsenrath. (3) Fed Debating Society. (4) The suspense is in the bond market. (5) S&P 500 remains remarkably resilient and overbought. (6) Friday was good for overweight-rated CFI sectors, which have led the bull. (7) Retailers getting pricey with P/E at 20. (8) Financials are relatively cheap. (9) Industrials should beat Energy and Materials in slow-growing global economy. (10) Earned Income Proxy rises to another record high. (11) Goldilocks on steroids. (More for subscribers.)
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