But the financial markets don't seem to be afraid of the fallout from the coronavirus. Stocks keep hitting new record highs and the VIX "fear" index (VIX) keeps creeping lower.
One of these trends would seem to be wrong–unless, of course, the rise in gold isn't a reaction to hedging and the fall in the VIX has to do with the very short time frame that the index tracks.
A declining VIX really only indicates that investors and traders don't see a need to pay up for protection on the volatility of the S&P 500 over the next month or so.
So what we could be seeing, and this makes sense is the rising price of gold saying central banks and other buyers are worried about volatility and particularly the volatility of the U.S. dollar in the medium to long run, and the falling VIX saying that investors and traders aren't afraid of stock market volatility over the next month.
The U.S. economy added 225,000 jobs in January, well above the average 175,000 jobs added per month in 2019. And still markets fell.
A scheduled statistic revision of the annual numbers for all of 2019 reduced jobs added in 2019 by 422,000. The revision and its likely size were announced by the Bureau of Labor Statistics in August so this morning's actual figures weren't a surprise by any means.
Sell on the fact. The market has been up strongly this week on a belief that the U.S. economy was stronger than expected and well able to withstand the effects of the coronavirus emergency on the global economy. Today's report is confirmation of that view so sell on the theory that the good news is now priced in.
Continued news from companies such as Apple (AAPL) that the coronavirus outbreak has disrupted supply chains. That increases the odds that the effect of the virus outbreak will last for more rather than less time. A warning from the Federal Reserve today that the coronavirus outbreak presented a "new risk" to the economic outlook for the U.S. and warned of disruptions in global markets. Nothing new here except that the Fed said it. The only blemish on the jobs reports this morning–an uptick in the official unemployment rate to 3.6% from 3.5%. This is well within the statistical margin of error and essentially means nothing, but for a market rally built on a belief in upward trends, this is a data point ill the wrong direction.
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