Grotesque Gifts Galore

 | Feb 07, 2014 | 3:57 PM EST
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Sometimes the market gives something for everyone. Today we got not one, not two, not even three but four gifts for the bulls with this unemployment number, and it is a reminder of how fickle and split the audience of stock players really is.

How else can you interpret this rally on the backs of the unemployed, as the country simply didn't create nearly as many jobs as one would hope (an astoundingly weak 113,000 when many were looking for 50% more than that)?

How could investors be cheered by this? First, we are always just glad when we put a huge number like this behind us, something you know as my Big Bad Event theory in which buyers are just glad that a market-moving number is now behind us, giving us some certainty for a bit. That's gift number one.

Gift number two? Some investors now think that the economy is so weak that you have to wander back into the classic growth stocks -- namely companies such as Priceline (PCLN), Celgene (CELG) or Netflix (NFLX), all of which soared because these companies have growth without the economy producing its own growth. That's when these stocks shine.

Gift three? When the economy is this weak many investors pile into the bond market, sending prices up and yields down. They are worried that earnings will be weaker than expected, and they want safety. That decline in yield then makes the higher-yielding stocks -- namely, the drug and consumer product companies -- as well as the higher-yielding master limited partnerships more valuable, and there was a rush to grab many of those. Of course, lower interest rates means lower mortgage rates, so the housing stocks got a nice boost.

Final gift? Many investors are willing to dismiss the weakness theory entirely and view the employment number as aberrant. In Get Rich Carefully -- thanks again Cramericans for another week on The New York Times best seller list -- I write that one bad employment number can be dismissed but two, then you must be worried about stocks. Judging from the buying in the cyclical and retailing stocks, however, there are plenty of people who simply don't believe that the economy is slowing, and the process of claims and job creation is being distorted by the sheer inability of the country to do well with so much weather dislocation. So, in a totally anomalous situation, buyers bought the cyclical stocks, trucking, metals and machinery with gusto.

I guess you could say there is something for everyone today, except, sadly, the unemployed.

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