For my inner economist, the first Friday of each month is the most interesting, as that is when the monthly “jobs report” is released by the Bureau of Labor Standards or BLS.

This morning’s report (it is always released at precisely 8:30 AM.) showed a slight uptick in the unemployment rate to 3.7 percent.  More importantly, the number of jobs created in June far exceeded expectations — 224 thousand instead of the expected 152 thousand.  So, you ask, how can unemployment rise when so many jobs were created?  Because the labor force increased!  The Labor Force Participation Rate increased to 62.9 percent.  Wages has been increasing at a 3.1 percent annualized rate, drawing more people into the labor force, causing the unemployment rate to rise slightly, despite the strong hiring.  The increase in the labor force was greater than the number of jobs created.

With the economy producing more jobs than expected, you might expect the stock market to be happy, but you’d be wrong.  The stock market is currently hyper-sensitive to the Fed and was expecting the Fed to cut interest rates later this month, providing a little stimulus to the economy.  As long as the economy is so strong, there is no reason to decrease interest rates.  Unfortunately, the market was already priced to reflect lower interest rates.  Immediately after the data release, Dow futures indicated a hundred point loss at the open.  Therefore:  Good news = Bad news, when the stock market is hyper-sensitive to the Fed.

This doesn’t change my overall assessment that the economy is slowing, but what did you expect a trade war to do?  Fortunately, there is still no recession in sight.  Stay tuned . . .