The Gilmo Report

June 4, 2017

June 4, 2017

The indexes blasted to new highs on Thursday, ahead of Friday’s Bureau of Labor Statistics’ jobs report. After a strong ADP jobs report that was released on Thursday morning, investors were anticipating a similarly strong number coming out of the BLS. That, however, was not the case, as a tepid 138,000 new non-farm payrolls were created in May (either in fact or by simple statistical sleight-of-hand) vs. expectations of 185,000.

Initially the market looked as if it would roll over on the jobs news, as this raised the specter of a weakening economy. But a soft economy merely keeps the Fed on hold, with a “one and done” interested rate increase likely in June. Beyond that, the massive pool of liquidity that remains in the global financial system becomes a driving force for the markets.

Some might conclude that because the Fed has ended its QE programs, the flow of liquidity has ended. But the reality is that the Fed’s portion of the liquidity pool remains untouched, while other central banks around the globe, including the Bank of Japan and the European Central Bank, continue to inject liquidity into the global financial system.

On Friday, sellers were nowhere to be seen. This sent the NASDAQ Composite Index to yet another all-time high, along with the other major market indexes, on lighter but still above-average volume.

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