TSP Talk – Post Jobs Report

Stocks had a big post-holiday week with the help of some encouraging words out of Europe on Thursday, and a “weak” unemployment report on Friday?

Here are the TSP fund returns for the week of September 4 through September 7, plus the up to date annual returns.

The S&P 500 broke out to new 2012 highs, and actually closed at its highest level since 2000. The chart looks nice, probably a little extended, but investors may have been encouraged by what they heard out of Europe, and the recent jobs report.

Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk

We have see several big rallies triggered by optimism out of Europe, but most of the time the hype turns into reality and the market eventually sells off, so I am not totally embracing the new “Europe is saved” talk. But a rally is a rally, and even a weak jobs report couldn’t take away Thursday’s gains. Why not?

There were 96,000 jobs created in August, well short of the 125,000 that was expected. The unemployment rate did drop from 8.3% to 8.1%, which sounds good, but that was a result of 368,000 more Americans leaving the labor force. Even the June and July job numbers were revised down a total of about 20,000 jobs.

You would think the market would drop like a rock on data like that, but instead it held onto Thursday’s gains, and actually moved a little higher on the news. This could be a bad news is good news situation because the Fed gets together at the FOMC meeting next week to discuss QE3, and a weak jobs report could move them closer to pulling the trigger. And why is that important?

The Fed might be expected to dump about $50 billion a month, for several months, into the system and that is music to investors’ ears.

Good luck, and thanks for reading. We will be back here next week with another TSP Wrap Up.

Tom Crowley
Weekly Wrap-Ups Archive
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