A six week winning streak in U.S. indices is on course to come to an abrupt end on Friday as this weeks’ commodity rout, likely combined with some profit taking in the absence of too much data, takes its toll.
Let’s skip the formalities: Today’s NFP report was essentially perfect. The marquee U.S. (and global) jobs report showed that the world’s largest economy created a stunning 271,000 jobs, crushing economist’s best estimate of 181,000 and the previous report’s negatively-revised 137,000 reading.
Zero-bound money – quality aside – lowers incentives to expand loans and create credit growth. Will Rogers once humorously said in the Depression that he was more concerned about the return of his money than the return on his money.
Mario Draghi, the Pied Piper of the European Central Bank, played a familiar tune and the markets followed. Global stock markets soared as the man with the magic flute (or is it a printing press) vowed that he is ready to act if needed and is open to a whole menu of monetary policy instruments to root out the rats of disinflation that signals risk to growth.