(as of 7:15 AM PST)
Investors are conflicted this morning. A strong employment report shows that the US economic recovery is starting to flex its muscles. New jobs grew by 280,000, crushing analyst estimates of 225,000. In addition there was positive movement of wage growth which is an indicator that economists had been looking for to confirm the strength of the US economy. Yet markets are down to start the day, adding to yesterday's large decline. It seems ever more clear that today's great reports confirm that an interest rate hike is right around the corner. This fact is wreaking havoc on bond and currency markets. The dollar is soaring in anticipation of higher interest rates while bonds are getting crushed. After an initial broad market decline, markets have recovered somewhat. Investors like what they see, but the fear of higher interest rates has them very tentative. It is a rehash of the old 'good news' is 'bad news' scenario that we have seen over the last few months. International markets are down as well, excepting Shanghai, which continues its amazing upward run. Gold and oil are down this morning. A stronger dollar usually pushes commodity prices downward, and a decision by OPEC to maintain oil production at thirty million barrels a day in spite of large supply overhanging energy markets is adding to downward pressure. Expect oil prices to continue to deteriorate barring some international event. It should be a volatile day to end the week with fear and uncertainty leading the way to a negative conclusion.
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