MorningWord 4/7/15: Bubble Gum

by Dan April 7, 2015 9:36 am • FREE ACCESS

I’ll keep this short and sweet. Yesterday, the market began with early weakness on the heels of Friday’s much worse than expected March Jobs data. About 15 minutes into the trading day those losses were erased and the reversal continued for the next few hours with the S&P 500, at one point, up about 1% on the day. That kind of action will ultimately be remembered as a textbook move for this bull market. You know the letters, say them with me, B…T…F…D!!!  (buy the ‘fargin’ dip).

The reversal in and of itself doesn’t really bug me. At this stage of the game if you are pressing down 1% openings then you probably want to reconsider your future in trading the markets. But I do find the reason for the reversal curious.  Investors are cheering the fact that the slowdown in hiring (slowest since December 2013) could mark a negative turn in the economic recovery in the U.S. making interest rate increases less likely in the near future. In what kind of bizarro investment world do we live in where that sort of data is met with billions of dollars in market cap gains??

The talk of investment bubbles seems to have died down a bit in 2015, especially as Q1 was essentially flat from a performance perspective here in the U.S. But maybe the most prominent bubbles right now in the market are the ones taking up space in investor’s complacent heads.