Dan Passarelli, CEO - Market Taker Mentoring

Happy Friday. And it looks like it might be a happy Friday. It's been an interesting one, for sure. Interesting in the fact that it was a little bit lackluster

The unemployment situation came out today, and there were 372,000 jobs added for the month of June, which is way higher than economists' estimate, for 250,000, which was just below Mays revised results of 384,000. You look at that and you'd be kind of surprised that the market hung in there, right?

I'm recording this video about a half hour before the market close, and we're up on the day at this point! We've lived in a paradigm for a while now where good news for the economy is bad news for the market. The old 'good news is bad news' sort of thing. But there's a reason for that.

What the market has been fearing is that as interest rates rise to cool the economy just a little bit. Because that is one of the things that can slow down inflation: but cool the economy much too much and earnings would suffer and that would lead to lower stock prices.

Here's the thing. When we look at pretty good economic news, a lot more jobs created than expected coming out, and the market hangs in there and is up for a good part of the day here, then could we be going in to a situation once again where good news is good news?

Well, we have to drill down just a little bit and look at a few more bits of information here. One of them is we have to look at rates itself. When we're talking about the Fed raising rates, they're talking about very specific interest rates. They're talking about a couple of rates. One that banks borrow money from the Fed at and one that banks lend to each other at.

Those are very different rates than when you go and apply for a mortgage. They're very very different rates than when a business goes and applies for business loans or issues bonds. Those rates: there's a lot more, higher interest rates factored in to those rates. They're factored in already to some degree, and we're seeing this higher market resulting from more jobs being created.

If we look at other information that came out today, we're looking at wages. Wages gained 5.1% year over year, which was slower than the 5.3% gained in May, so more jobs added, but a little bit of a slower increase in wages. That's one of the big fears, is that wages rise too much. Because that's one of the things where, when the prices of commodities and the prices of products and the prices of all these other things rise as wages rise with them, that just kind of snowballs and it perpetuates the cycle.

When I see that wages have grown less than they grew the previous month and more jobs are being created, that could potentially be some pretty big news that could lead to good news being good news and how the market digests it. The key thing to watch is going to be CPI which comes out five days from today. It's going to be July 13 and IF: (I make no prediction on this but IF) CPI ends up being lower than expected, that could to be some pretty darn good news for the market.

So next week's a really important week. Hang in there. Have a great weekend.