Oh, God, please don’t make me do it. The U.S. stock market’s extraordinary, positive reaction to a nonfarm payrolls report that was about 50% below expectations — with only 245,000 jobs created in November — forced me to go to the BLS website and actually read the report. This is a horrible report. While some financial news networks attempt to spin it positively, I instead, try to find investment implications. As I mentioned in yesterday’s RM column, virtually no one does this type of analysis when the market hits all-time highs. Finding inflection points is the way to produce returns above systemic market returns, or alpha.
This report paints a picture of an American labor market that has been fundamentally, not temporarily, changed by the Covid-19 crisis. The jobs report is composed of two surveys, the Household Survey and the Establishment Survey. Most observers focus on the Establishment Survey and