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So the jobs report for March was a bit disappointing, with just 98,000 jobs created. By itself that’s not a bad number, especially since wages grew 2.7% YoY, and unemployment fell to 4.5%.
However, ADP’s estimate of 263,000 had many hoping that the first two month’s ganbuster jobs numbers would continue. Turns out those were largely created by warm weather causing a temporary boom in construction.
Now the big question is how quickly can GDP grow, without the fiscal stimulus that Trump promised us, (which is likely to take much longer than initially hoped for). Estimates range from the Atlanta Fed’s 0.6% to the far more optimistic New York Fed’s 2.8% projection. If the economy can accelerate its growth towards 2.5% in 2017, and corporate earnings can indeed grow at around 8% to 9% as expected, and wages keep rising, resulting in higher consumer spending, than even if we don’t get tax reform this year, the market should still hold up nicely.
If not? Well then we’ll get that correction I’ve been yearning for.
Meanwhile, we were crazy busy this week, buying up ever larger blocks of L Brands (LB) shares, as they plummetted seemingly day after day. Then on Friday they jumped 11%, potentially indicating the market has found a bottom for one of the most hated, and undervalued stocks on Wall Street. That helped to boost our portfolio’s yield past 4%, so now just over double the market’s yield.
That was also helped by our taking advantage of the market’s freak out over 8Point3 Energy Partners’ announcement that its sponsors might be selling their stakes. Where the market sees fear and panic, we see opportunity.