Transcript:
Tom Vaughan:
Hello, everybody, welcome to Friday, the S&P 500 was up almost .9%. Today, we saw a broad move across all of the different indexes that were all green today, really strong day. And the jobs report was the big catalyst today, actually. We talked about a little bit yesterday, but what happened today was that there was 559,000 new jobs created in the month of May. And so the expectation was about 650,000 new jobs, so a little bit lower than expected. And there’s what they call a Goldilocks zone for, and you’ll hear this quite often for the economy, you know, where it’s not growing too hot, where inflation comes in. And that creates all kinds of problems for company earnings are too slow, we’re bout to head into recession or something, because things are going so slow.
So this job report today was really good. And you can see that actually, the market, you know, responded quite positively to it first thing in the morning, and then just kept kind of marching up all day long. As far as that goes, because it does a couple of things. If, you know, if we had 2 million jobs or a million jobs, or some of these bigger numbers, it scares the market into thinking that we’re going to run out of people to bring back into the workforce. And we’re going to have to increase wages a lot, which then of course, can affect company earnings. And so when it comes back in a more measured pace, which has been happening here the last couple of months, but the market really likes that. And again, that’s part of that Goldilocks zone as far as that goes.
Now, the one thing that’s very fascinating about this is the piece that’s different. And again, this is not a normal recovery from recession, this is a reopening. And that’s piece that’s different is how many of those jobs that are still out there that are being unfilled, that people aren’t taking, because they’re not coming back to the workforce quite yet. Maybe they get kids at home, because the school hasn’t opened, or they’re afraid of the virus, or they like their $300 extra unemployment checks, whatever those things might be. And so, what we’re seeing from the market today is a very positive note about what they’re seeing in terms of this kind of unemployment picture.
So these are really important components, these particular reports. And again, you can see how much the market focuses on corporate taxation, unemployment, those types of things. And so this job number today also makes the market excited, because there’s a feeling that the Federal Reserve can continue to keep their kind of easy money policies in place where they’re purchasing, corporate bonds on the open market at 120 billion a month. And that’s, can continue longer potentially, and or they keep their overall interest rates down, the Fed Funds rates right around 0% right now. So those types of things that are happening, the jobs report is a really important component for what happens.
The next big things that we’re going to be seeing are kind of the second quarter earnings reports. And I think that’s pretty important that they do really well, a lot like they did in that first quarter, just to kind of really stamp, hey, this is working, the reopening is happening and commerce is happening, money’s being spent. And we’re seeing, some good earnings come from that.
So, that’ll be the thing that we’re really talking about here over the next probably six weeks or so, are all these earnings reports. But today, it was all about the unemployment report, which was really, really good. I was pretty happy at 559,000 jobs. I think that’s a good amount of growth, but not too much. And so let’s look forward to see what’s going to happen next week. You know, things are moving along nicely. The market is continuing to chug really well I think as far as that goes. So look forward to talking to you on Monday. Thank you.