The Daily Dose: Stop Picking On the Jobs Report

 | May 05, 2014 | 11:00 AM EDT
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Whoa, so much for a nicely positive April employment report! The quality of the reading on the U.S. economy was heavily panned over the weekend, almost to a degree that a casual bystander (ahem, mutual fund lovers) could easily believe that zero jobs were created in April.

Yes, a brutally low labor force participation rate and nonexistent wage inflation were concerning aspects, but the economy was solid enough to put folks back to work at a quicker pace than many financiers thought.

Here are a few counterpunches to the face of the pikers:

  • 288,000 more people are now in a better position to unleash their pent-up demand for goods and services this spring, seeing as they lacked the finances and confidence to do it during the harsh winter months.

  • 288,000 people are now in a position to work hard at new jobs on initially mediocre paying gigs, boosting the productivity of businesses and their financial statements. If these companies are publicly traded, boom goes their stock price ... or so they hope.

  • 288,000 more people, by making early efforts to impress new bosses and co-workers during probationary periods, are poised for raises this summer.

  • Three consecutive months of upward jobs momentum enters people in a pool for a previously un-thought-of bonus, come the holiday season.

Far be it from me to be all Pollyanna-ish regarding any set of macro data compiled from government lifers. I definitely view every digital doc with the skepticism that is vital to making calls on equities and on the broader market. However, the drumbeat of Debbie Downer analysis on the April employment report got under my skin.

Despite the report's flaws, we have an accelerating U.S. economy that is not so hot as to derail expectations within the Federal Reserve regarding future policy intensions. That's a good backdrop for stocks, in my opinion. We are able to get a little multiple expansion in the lead-up to second-half 2014 earnings, and then companies are likely to beat expectations, causing positive responses in the market when the reports hit the wires.

Child's play...

Around the Horn

Buffett: Thumbs up to Carl Icahn for taking it to Warren Buffett in Barron's this weekend. From the perspective of a millennial in finance, I am growing tired of the Buffett obsession that has existed since the day I stepped in the business 11 years ago. The man is not a god, and we can't relate to him on almost any level except that he is a human, wakes up in the morning, ties his shoes and eats food. It's time to focus on up-and-coming leaders in business (in the areas of tech, agriculture, etc.) who are driving grassroots change that stands to affect a global society 10, 20, 30 years into the future, instead of a billionaire who owned a railroad and Coca-Cola (KO) shares at some obscenely low level before I was even a twinkle in my parents' eyes.

Twitter (TWTR): The company will not turn a GAAP profit anytime soon, because of massive stock compensation expenses. That means that for Twitter shares to gain ground consistently, there will have to be a development that can sway deepening negative segment. The likely development: an acquisition that provides a new user base upon which to push ads and other services.

Sears (SHLD): The annual shareholders' meeting is Tuesday, and we are very intrigued to hear Eddie Lampert's ridiculousness, probably on the company's blog section. That said, according to my sources, there could be a new round of negative news from the company within the next month.

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