Why the Limited Reaction to Payrolls?
The US unemployment rate soared to a 15 year high in the month of November as non-farm payrolls incur the steepest slide in 34 years. Although currencies and equities sold off aggressively following the release of the labor market numbers, they clawed their way back to end the US trading session in positive territory. In the face of economic data that screams severe weakness for the US economy, the fact that currencies and equities recovered are nothing short of impressive. The counterintuitive price action in the financial markets makes us very skeptical of believing that the recovery is here to stay. There was nothing good in the jobs number and when it comes to the labor market, there is no such thing as a capitulated bottom. The only explanation for today’s recovery in equities and currencies is the market’s increasing immunity to bad news. The 8140 level in the Dow and the 815 level in the S&P seem to be very important support levels. They have held all week and were also major po
