Jobless rate

This topic contains 6 replies, has 2 voices, and was last updated by  Anne 2 years, 9 months ago.

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  • #18511

    Bruin79

    Why is it when the jobless claim rate report comes out the market drops, good or bad the market drops, today the report came out and the market is down after being up this week.

    #18512

    Anne
    Participant

    http://mam.econoday.com/mobile/mobileindex.aspx?cust=mam I think it has more to do with expectations vs results…it often seems to be different than you expect…but there are many factors that impact market.

    #18513

    Anne
    Participant
    #18514

    Bren

    IMHO the market only cares about one thing right now. How accommodative central bank policy will be. Any news that hints at a reason for Yellen, or any CB for that matter, to tighten accommodations are a reason for stock to pull back slightly. Any hint of economic data indicating CBs will remain accommodative send stocks rip roaring higher.

    #18515

    Anne
    Participant

    I agree with Bren about the central banks and QE and that also ties back to expectations. Good job market = greater chance FED will increase interest rates sooner. The market seems to react to everything whether it is an actual number, a forecast or a revision of such. Look at earnings and see if you can make any sense out of what the market did this week.

    “As U.S. policy makers weigh data to decide on the path for rates, a report today showed jobless claims unexpectedly decreased to the lowest level since 1973 as the labor market remains a pillar of support in the world’s largest economy. A separate report showed an index of leading economic indicators rose less than forecast in March and the prior month was revised lower.” http://www.bloomberg.com/news/articles/2016-04-21/u-s-index-futures-little-changed-with-s-p-500-at-4-month-high

    #18516

    Bruin79

    So I’m thinking when I know the job report will be due out, I should move my TSP to the G Fund for a few days each time the job report comes out, even today since the job report came out yesterday the market is still going down, I don’t try and time the market but seems like this is accurate consistent each time in the past when the job report comes out.

    #18517

    Anne
    Participant

    You may be right, there seems to be a correlation but I think the root cause is expectation regarding when Fed will raise interest rates.

    2014 article indicates stock prices are related more to economic cycle, which unemployment is only one factor. “As unemployment edges closer to its trough and Fed support dwindles, this analysis suggests that growth could get better but the stock market could move sideways.)” http://www.gailfosler.com/unemployment-stock-prices-stock-market-aging

    2013 article shows positive response to unemployment report; it states: “U.S. equity markets have been very happy with the status quo: job growth that shows modest improvement but not enough to sway the Fed to back off of its extremely accommodative monetary policy.
    http://www.sperosmith.com/blog/2013/06/10/the-stock-market’s-reaction-to-friday’s-employment-report-insights-for-investors/?page_id=805&print=pdf

    October 2003 FED report discusses monetary policy impact on stock market.
    http://www.econstor.eu/bitstream/10419/60670/1/378798510.pdf
    “Taken literally, this result suggests that tight money (for example) lowers stock prices by raising the expected equity premium. This could come about in at least two ways. First, tight money could increase the riskiness of stocks directly, for example, by raising the interest costs or weakening the balance sheets of publicly owned firms. Second, tight money could reduce the willingness of stock investors to bear risk, for example by reducing expected income or wealth or increasing the probability of unemployment as in Campbell and Cochrane (1999).”

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