NFPs miss big
Markets were expecting a massive gain for US payrolls as states opened up in April, perhaps up to a million jobs been added back.
In the event it was the biggest fizzer in nonfarm payrolls history, with a print of only +266,000.
It rarely pays to get too hung up on one month of figures, but it was nevertheless a big miss.
After accounting for revisions, 14 million of the 22.1 million jobs lost have been recovered to date, or about 63 per cent.
The unemployment rate ticked a notch higher to 6.1 per cent (although it's looking a lot happier than 14.7 per cent a year ago!).
Naturally this was a disappointing result, but with jobless claims continuing to fall it seems likely that the next 8 million jobs can still be recovered over the next 2-3 years as the U.S. economy reopens in full.
Stimulus settings
This was a Goldilocks result indeed for asset valuations, giving the Federal Reserve further breathing space and offering evidence that the American economy isn't overheating (even if speculative activity across markets has become a virtual laughing stock).
On specifically stocks, investors and punters have sent U.S. indices to valuations we've never seen before across a range of metrics, seemingly betting that the $10 trillion or so of stimulus will lead only to transitory inflation.
Valuations are so high that historical valuation metrics point to the potential for huge declines from 4,235, where the S&P index is today.
Of course there's no guarantee of mean reversion any time soon - history shows it can take a long time to play out, although it has always happened eventually - but if the focus is on not losing money then these are wild times.
Have a great weekend!
