I have two big points that I want to talk about today—the excellent news we had on the jobs front this week and the latest quantitative easing news from the Fed.
First off, the better-than-expected jobs numbers were a very welcome sight! Look at the details:
- ADP reports that private payroll growth rose 216,000 in February—the 25th straight month in a row of growth.
- The Labor Department reports that February payrolls rose 227,000, and December and January payrolls were revised higher by a very healthy 61,000.
- Finally, the broader household survey showed an even stronger 428,000 surge in February job growth, following January’s stunning 847,000 gain in the household survey. According to the household survey, job growth has surged 2.3 million in the past six months to a monthly average of 385,000, which represents the strongest job growth in 12 years!
So overall, while the rest of the world’s GDP growth may be in for some bumps, it appears that GDP growth will remain robust in the U.S. as solid job growth helps to boost consumer spending.
The second bullish note for the stock market is that companies continue to issue a record amount of bond debt at extra-ordinarily low interest rates, often for the primary purpose of refinancing existing debt and to buyback their outstanding shares.
Interestingly, The Wall Street Journal reported this week that the Fed is considering a new type of bond-buying program designed to dispel worries about inflation. Specifically, the WSJ reported that the Fed would print new money to buy long-term mortgages or Treasury bonds—in essence, this is a third round of quantitative easing.
Frankly, in my opinion, the Fed is now up a creek without a paddle, since inflation is about to explode in the February inflation statistics that will be announced soon, so it is clear that the Fed is scrambling to try to reestablish its credibility.
As a result, next week’s statement after the Fed’s Federal Open Market Committee meeting is expected to be crucial and I hope the Fed finally acknowledges the inflation that you see every time you go to the gas station or grocery store. I’ll be in touch with all the details as we find out more.