Technical & Fundamental Oil Reports Specialists

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New norms or abnormals?

Published Monday, March 9th, 2015

– On Friday the US turned in a much better than expected non-farm payroll figure adding 295,000 new jobs taking the three month rolling average to 288,000. This represents the longest run of increases above 200,000 since 1994 with the added bonus that the unemployment rate fell from 5.7 to 5.5%. Great news you might think, but it was greeted by a stock market sell off because the positive data may bring forward an interest rate increase to June rather than later in the year.

The US stock market it would seem is still feeding off low interest rates rather than on the health of the economy. It is impossible to draw any other conclusion than that investors have little faith in the growth of corporate revenues and profits even though there is the following wind of low oil prices. In simple terms investors feel that stock markets do not merit being where they are if interest rates rise, even if it is in response to positive data.

This is not normal, but is it something we should get used to or an aberration and another confirmation that QE is creating huge distortions and turning the economic world upside down? It is abnormal when stock market punters want bad economic data releases to put pressure on the Fed not to increase interest rates. It is time for the Fed to act and test if this market can stand on its own two feet.

to read the rest of the report, please click here

Posted by David Hufton