Shout out to the U.S. economy for staying alive as two polarizing public figures battle for the presidency. And that is pretty surprising given recent news flow from corporate America.
Starbucks (SBUX) CEO Howard Schultz hopped on an earnings call Thursday evening and said the presidential election is causing uncertainty around the world. Although he didn't say so specifically, the comments were likely made to explain so-so sales results in the U.S., Asia and Europe. Caterpillar (CAT) remains in perpetual restructuring, recently announcing more layoffs. Harley-Davidson (HOG) launched a restructuring campaign headed into year-end to align the workforce with current demand.
These are just some of the examples of the U.S. economy not performing up to snuff in large part due to the election weighing on the minds of consumers and corporate chieftains.
But the October employment report went a long way to demonstrate the U.S. economy's underlying momentum across a broader set of industries. If there aren't any black swan events post-Election Day next week, one gets the picture that the jobs market could pick up a notch headed into the first half of 2017 (barring major storms, of course).
October non-farm payrolls rose 161,000, missing consensus forecasts for an increase of 175,000. However, it wasn't about the headline number here folks but rather the overall strength of the report:
-- Steady job creation despite the presidential election is a good sign.
-- 44,000 in upward revisions to prior months.
-- Wages higher, again. Should be somewhat bullish to consumer stocks a mere weeks before Black Friday.
Now investors have to make a tough choice. On paper, this jobs report should be short-term bullish to the markets. It reaffirms what is already known in that the Federal Reserve will likely raise interest rates in December. So, it gives investors one more month to bet wildly on stocks (which are now at cheaper levels given weakness the past eight or so trading sessions) using cheap credit.
This would also be a great time to play the takeover theme as there could be one last round of big deals ahead of the Fed's rate hike. But keep in mind that if you go long here, you are wagering that Hillary Clinton wins the White House next week. A Donald Trump win would negate the investment thesis I just outlined, and likely send the markets into a tailspin (as Citigroup (C) so eloquently pontificated today).
Have fun out there!