NFP Expectations

[HuggieBear]

Does anyone else have the feeling we are setting up for missed expectations on the NFP report, and a subsequent selloff? Or at minimum, met expectations but a sell the news respone?


The market is currently levitating. NFP expectations are sky high, for two reasons. One is simply the belief that the economy has turned the corner, and as a result we are adding some jobs.


But, the more important factor is people believe the gov's hiring of census workers makes it a near lock that the jobs report will be positive in a big way.

This second aspect gives the me the feeling that we could see, even if the jobs report is good, a "sell the news" response, primarily because the good news is baked in at this point and there may be some disappointment that the gains are driven by temp hiring.

The risk is, of course, the jobs report somehow beats even these elevated expectations, and the market goes crazy.

Tough call, but i think it might at least be good cause for a low risk put position going into the numbers on Friday.

I wouldn't bet the farm on it, though...

 

[circadian]

Quote from HuggieBear:

Does anyone else have the feeling we are setting up for missed expectations on the NFP report, and a subsequent selloff? Or at minimum, met expectations but a sell the news respone?


The market is currently levitating. NFP expectations are sky high, for two reasons. One is simply the belief that the economy has turned the corner, and as a result we are adding some jobs.


But, the more important factor is people believe the gov's hiring of census workers makes it a near lock that the jobs report will be positive in a big way.

This second aspect gives the me the feeling that we could see, even if the jobs report is good, a "sell the news" response, primarily because the good news is baked in at this point and there may be some disappointment that the gains are driven by temp hiring.

The risk is, of course, the jobs report somehow beats even these elevated expectations, and the market goes crazy.

Tough call, but i think it might at least be good cause for a low risk put position going into the numbers on Friday.

I wouldn't bet the farm on it, though...

We've seen the top of the unemployment rate, as a whole. That's not to say that there won't be any variance in the figures. If we are to see abberational growth in the U-level, I suspect that it would be both March and May figures.

That's what's on my mind. Unemployment has peaked, but we'll stay well above the normal NAIRU levels for years to come. Blips and blurbs in the data will be expected. Market looks highly capable of mounting a large, irrational reaction to any number. Quarter-end window dressing coupled with retail toe-dipping is proving to be a booger for the bears.

 

[HuggieBear]

I agree, but great numbers and a good reaction are starting to seem like a foregone conclusion. In my experience that usually makes for a high-risk situation.

Its a fair point though -- if the market stays in the 1160 range and doesn't creep up toward the end of the week, there is probably much risk of an explosive upside move in response to the report.

However, I bet they run it up. Why wait for the actual report, when you can run it up in advance based on expectations, and then sell off once it's announced.


We'll see.