Does the market think bland is best? It seems that way as the US equity market rose after the US jobs report came out today with mediocre results. Payrolls rose by about 160,000 but there was negative revisions to the prior month. The percent of the population in the workforce also fell, but the headline unemployment rate stayed at 5.0%. On the positive side, the broader measure of unemployment including discouraged and part time workers fell to 9.7% and hourly earnings grew by 2.5% year over year. This is the classic Goldilocks tale of neither too hot nor too cold. The jobs report does not make you think the economy is going to fall off a cliff, but it is not so strong as to suggest that the Fed is going to take action in June. While that might feel good in the short-term, the US economy is still growing at a below long-term trend pace. Granted, this is a global phenomenon and the US is at the top of the heap, but it does make you wonder how long earnings growth can sustain when revenue growth (tied more closely to economic activity) struggles and we seem to have reached the near-term limits on the benefits of productivity (doing more with less which results in profit margin expansion).
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