WASHINGTON – After stocks took on a modest but an unsettlingly confused downside move Thursday, investors wondered whether this week’s rally had run out of fuel. They got their answer Friday morning. In a genuine shocker, even for this bullish columnist, the government announced some truly stunning news. In May, the coronavirus shattered US economy ADDED 2.5 million jobs. Not lost. ADDED. 2.5 million jobs. A monster stock market rally immediately blasted off following the news.
That’s right. May saw the biggest number of US job increases ever, showing what we can begin to expect as the American economy begins what’s likely going to be a YUGE recovery from the certain death. The economy death that the media has gleefully predicted all spring. Until, maybe, today.
CNBC writers made the following point about that impressive jobs number.
“Those [job] gains came after the Labor Department reported the U.S. unemployment rate came in at 13.3% for the month of May. That was much better than the 19.5% estimate. Overall employment rose by 2.5 million last month. Economists polled by Dow Jones had forecast a decline of more than 8 million jobs.”
2.5 million jobs added in May? Stock market averages explode to the upside
As this column develops – circa 11:30 a.m. ET – the Dow is soaring, up 900 big points at the moment for a whopping 3.43% gain on the day thus far. The broader-based S&P 500 isn’t far behind, up 83.7 points for a gain of 2.68%.
The tech-heavy NASDAQ lags the other two major averages at the moment. It’s still up 1.83% at the moment for an impressive 174.65 point gain. We’ve experienced some profit taking recently in many overextended techs. That’s likely a major reason behind the NASDAQ’s relatively (very relatively) anemic performance Friday morning. But still, the NAZZ has joined today’s monster stock market rally.
Bottom line: Although we could see a bout of profit-taking Friday afternoon or Monday morning, one thing remains clear. One thing I’ve been claiming for several weeks now. What we’re seeing is not a bear market rally and never was. Friday’s 2.5 million jobs number and the resulting trading action confirms the astonishing return of the Great Trump Rally.
President Trump takes a victory lap
Not unexpectedly, given the thumping he’s endured from nearly everyone this spring, President Trump took a victory lap on the economy this morning. He began by lobbing out an ecstatic pair of tweets that, for some reason, Twitter hasn’t bothered to censor (yet).
THESE NUMBERS ARE INCREDIBLE! @MariaBartiromo
— Donald J. Trump (@realDonaldTrump) June 5, 2020
I am so stunned. I’ve never seen numbers like this and I’ve been doing this for 30 years! Steve M. @MariaBartiromo
— Donald J. Trump (@realDonaldTrump) June 5, 2020
He further elaborated on today’s phenomenal job numbers and market rally during a late Friday morning news conference and bill signing.
A short look back
Everybody in the media, and nearly everyone on Capital Hill has been predicting either a deep recession or Great Depression II since the crushing of Mr Market commenced in late February. Although the market’s initial down-move proved genuinely horrifying, nearly everyone in the media firmament has continued preaching gloom and doom primarily because scaring Americans always sells more newsprint and cable TV hysteria. The continuous scare headlines are mostly geared toward sweeping out the Trump administration this November, and scare headlines about our economic future always sell a lot of ads.
Problem is, as I’ve often said, “everybody” is nearly always wrong. And today’s fabulous economic news is a great example of this.
Some welcome honesty from the Tyler Twins
A hat tip to ZeroHedge’s Twin Tylers for being the first economic naysayers to fess up to their earlier negative estimates. (Bold text via ZH.)
“‘In our preview of today’s historic job’s report we said that on one hand ‘the labor picture will be far worse than anything observed before in US history, eclipsing the darkest days of the Great Depression’; on the other nobody will care and markets will likely soar as the report ‘tells us what we already know’ and there is ‘little in the BLS report that will offer any forward-looking insight – that will depend on progress regarding the reopening of economies, and official support measures.’
“Well, take all that and throw it out of the window, because moments ago the BLS shocked markets when it reported that, contrary to week after week of millions in initial jobless claims, and in line with the much more optimistic ADP report, not only did May payrolls not drop by the 7.5 million expected drop, but actually SOARED by 2.5 million, crushing expectations, and indicating that already in May when the country was under widespread lockdowns, jobs came soaring back.”
Monster stock market rally shows Investors already putting this week’s riots in the rear-view mirror
Looking back just a bit, Fox Business posted some insightful comments on Thursday’s bi-polar trading activity. Happily, the topic sentence echoes some of my own observations in a previous article. Fox notes that the ongoing Antifa-led riots seem to have little effect on the Street’s bullish mood.
“The S&P 500 keeps fighting its way higher from this year’s lows despite riots and looting that left a trail of destruction across America just as businesses were beginning to reopen from COVID-19 shutdowns.
“The benchmark index has climbed 5.66 percent since the death of George Floyd through Wednesday, and is now just 8.43 percent off its all-time high. It had fallen by as much as 34 percent as stay-at-home orders aimed at slowing the spread of COVID-19 closed nonessential businesses and eliminated unnecessary travel.
“Stocks are ‘focused on a successful reopening of the economy,’ Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, told FOX Business.”
The negative Deep State economic narrative is failing
What’s interesting here becomes clear if you can tune out all the static that Antifa, the media, the Democrats and the Deep State keep throwing out to terrify voters leading up to the November election. Mr Market has been telling us that America wants the Great Trump Rally to resume where it left off in late February.
To hell with the coronavirus, the violent insurrectionists and blue state governors still pushing “social distancing” while destroying their states’ small businesses. That’s what Mr Market is saying.
The Great Trump Recovery has started
Fox Business’ Stuart Varney also thinks the Great Trump Recovery is returning, telling us why “we’re seeing the most ‘explosive’ market rally ever.”
“‘We have entered the return to work phase of the virus recovery. There are clear signs the economy is on the move again – that fires up the animal spirits. Virus depression is giving way to the excitement of recovery,’ Varney said… The short supply of public companies and stocks, trillions in stimulus and the urge to invest at a profit: all combine to give us the most explosive rally ever.”
Back at CNBC, the volatile but frequently correct Jim Cramer has remained cautiously bullish for most of the spring. So, given today’s monster stock market rally, he’s rightfully rejoicing now. And we can see this via CNBC online’s article headlined:
‘We’re back’ — Cramer says May’s shocking, record jobs gains show economy bouncing back
“‘I think there were a lot of people who felt that the layoffs would be permanent and it’s obvious that there’s so much demand that people have to bring people back.’
“The nation’s unemployment rate in May declined to 13.3%, according to the Labor Department.
“Economists surveyed by Dow Jones had anticipated that nonfarm payrolls would drop by 8.3 million and the jobless rate would increase to 19.5% from April’s 14.7% rate on 20.7 million job losses.
“‘There were many people who thought this would be the historic beginning of the depression, 20% layoff. We’d start looking back to comparing it to [1931, 1933] and that’s off the table,’ Cramer said.”
Yes. 2.5 million jobs added back into the economy. Great Depression II is off the table. We still don’t know how future events might unfold. But the worst-case scenario no longer seems viable.
Wrapping it up
With that, let’s just sit back and enjoy the fun. We might see a few selling bouts today. Many stalwart investors held on to their portfolios. Consequently, they now enjoy gains again and may want to take some money off the table now. And a day like this is probably not the kind of day to chase stocks, as we may very well have a day or two of buyers’ remorse.
But we’ll try to come up this weekend with a few more ideas to share. Right now, it’s hot outside in the suburbs of the DC Swamp. So, while sheltering in place, a better idea might be to pull a fresh lime out of the fridge and start mixing up a couple of tall, cold gin and tonics.
– Headline image: NASA simulated Mars Lab rocket launch. Today’s Wall Street rally may not last forever.
But at least we’re having fun today. (NASA U.S. Government image, in the public domain)