What Happened Last Week?

After a defiant start to the month, a second day of aggressive profit-taking is confirming the adage “Sell in May”. In the spotlight on Friday was the jobs report. The numbers for April were weaker than expected for nonfarm payrolls growth in the US (115,000 versus forecasts of 162,000). Private jobs creation also missed expectation (an increase of 130,000 compared to estimates of 167,000). The bad news in Friday’s unemployment figures is, this confirmed roughly 350,000 dropped out of the labour market rather than the robust hiring expansion. We need to see improvements to underpin the growth story for the economy otherwise expansion is unrealistic.

 The possible “silver-lining” is the trend of reduced job creation could be the catalyst of economic data required for Ben Bernanke, as Fed Chairman, to make good on his recent remarks – “prepared to do more as needed” and lead another round of quant easing.Finally, the CBOE Volatility Index (.VIX) is up about 6% near 18%. This action is unlikely solely to signal short-term fearful extremes as it is still lower than April’s high of almost 21%. The only clear message we can see, from a contrarian standpoint and regarding investor fear is that the market is very sentiment driven and clearly is still at a cross-roads where there is equal opportunity for both optimism and pessimism.

We wait to see the outcome over the next phase but volatility is definitely here to stay.

My contact details are :- tel 029 2020 1241, email welshmoneywiz@virginmedia.com, twitter welshmoneywiz, linkedin Darren Nathan

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