Comments on US NFP Data

Comments on US NFP Data

The US NFP data has confirmed that the lavish party in the employment sector is still somewhat solid, especially if you look at the headline number. You can say that it was a super solid number because it was well ahead of expectations. This week we had a number disappointing news with respect to what traders were expecting, for instance, the Bank of England’s event.

It is not all good news when it comes to the US jobs number because if you peel the layers, it shows that the downside surprise is in the wage report and a lot of disappointment there. We still need to see more readings before we can see that there is a trend because this number is full with noise.

There is no doubt that the hourly wage growth has gathered the most momentum recently and fuelled this concern among traders that the Fed is behind the curve, while inflation is picking up steam. Clearly, today’s number has put cold water on that. Moreover, if you are interested in a rate hike, then clearly you need to know that the Fed cannot move until they have a clear idea what the fiscal spending will be and that is the reality which market needs to digest.

Equity Market And Dodd Frank
Most of the gain that we are seeing today in the market is driven by the financial sector and primarily by banks. Donald Trump has already dealt with more controversial things like building the wall and immigration. Now it is time to deal with regulations and there is a lot of optimism that Dodd-frank rule can be repealed. This is driving the momentum in the banking stock and this will remain the major driver. If Trump administration is able to replace Dodd- Frank with something more friendly, you may want to go heavy on the banking sector because this is where we could see the most momentum.

The Fed added nearly 3000 regulations since the introduction of Dodd-Frank which lead to more confusion and produced counterproductive results (in the short term). This is what Donald Trump is trying to fix.

Equity traders will very much like to see bigger ranges and less volatility once Trump is done with all his of dramatic measures, but for now, we have tighter ranges and higher volatility.

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