Dow Soars off Strong Jobs Data
Bottom line, America is working…
– Larry Kudlow, National Economic Council Director
The latest jobs report showed that the unemployment rate just dropped to 3.5%, a 50-year low!
Half a century — that’s almost as old as I am!
The Labor Department reported that our economy created 266,000 new jobs in November. That’s 43% more than the 186,000 that Wall Street was expecting.
Moreover, the previous two months were upwardly revised: September was upped by 13,000 to 193,000 and the October jobs number increased by 28,000 to 156,000. Plus, wages were up 3.1% on a year-over-year basis.
Sure, the current economic expansion is old, but as the November jobs number shows, our economy is vibrant, strong and healthy.
But that’s not why the Dow Jones Industrial Average shot up by 337 points that day. The reason is that the Federal Reserve is flooding the economy with liquidity, as you can see below…
Since Oct. 8, 2019, when the Federal Reserve announced that it would resume its bond-buying program, the Fed’s balance sheet has increased to more than $4 trillion.
Four trillion! That’ll buy a lot of holiday cheer!
As the accompanying chart shows, we’re talking about more money than QE1, QE2 or QE3.
In the past, the Federal Reserve has added liquidity when the economy is weakening, but with the economy adding 266,000 new jobs and unemployment hitting a 50-year low, we’re looking at the Federal Reserve throwing fuel on an already hot economy.
On top of that, the Fed has cut interest rates three times since July. And while the economy doesn’t really need the Fed’s help, it’s getting it anyway.
Here’s what’s happening: President Trump has browbeat the Federal Reserve into making sure the bull market continues to push the stock market higher until the November 2020 election.
The Federal Reserve has turned on the monetary spigot and the stock market is headed higher. A lot higher.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch