Saturday, May 28th we learned that a 400-pound gorilla at the Cincinnati zoo killed when it picked up a wayward three-year-old child and dragged it round his living area. Friday, another 400-pound gorilla — reality — struck as the rose-colored glasses dropped for a just a moment to reveal that the economy might not be doing so well after all. Granted, the employment report these days is manipulated beyond recognition with “seasonal adjustments,” “revisions,” and other “creative accounting tricks.” Mark Twain (Samuel Clemens) said it best “Figures don’t lie, but lairs figure.” Perhaps this latest turn in the numbers is to give cover for more foot dragging in the form of interest rate hike delay by the FOMC.
U.S. markets were closed Monday for Memorial Day and moved little in foreign markets. Tuesday, stocks rose 0.7% in Asia, but fell 0.8% in Europe and 0.3% in the U.S. on strong volume. The VXO rose 0.9% to close at 13.28 while precious metals miners gained 1%.
Wednesday, stocks moved little in Asia and the U.S. on moderate volume, but lost 1% in Europe. Thursday, in Asia stocks fell 0.8%, in Europe closed little changed, and in the U.S. rose 0.3% on moderate volume. This was enough to push the S&P 500 Index above the 2100 level and bring NASDAQ 5000 within striking distance. The VXO fell 5% to close at 12.72 while the 10-Year U.S. Treasury Bond yield fell 2% to close at 1.81.
Friday, stocks rose 0.5% in Asia, fell 0.9% in Europe, and closed unchanged in the U.S. on light volume. But the 10-Year U.S. Treasury Bond yield plummeted 5.9% to close at 1.70, while precious metals gained 2.6% and their miners skyrocketed 11%. The big news of the day was the woeful employment report.