The Employment Situation and ISM numbers released on Thursday and Friday largely explain the broad based sell-off. Investors were expecting more.
I'm going to take a step away from the crowd and argue the numbers weren't bad. The ISM numbers showed growth in the service economy. It's not a large growth, but it's growth. Any growth, besides cancerous growth, is good growth. While it did not meet consensus expectations, from an economic perspective it's not too bad because it's still growth.
The unemployment figures leave me feeling a bit mixed. Until the GDP recovers about 2%-3% (Okun's Law) we can't really expect the unemployment figures to get much better. OTOH, unemployment numbers usually lag any recovery in the economy. Tricky.
The two not so stellar figures have been the catalyst for the fears of "too much too soon" to take hold and explains recent sell-off.
I'm going to officially step back from the crowd/market and put myself on the line. I believe, about 2 standard deviations believe :), the recent sell-off is a great time to get back in the markets. For obvious reasons I would rather not discuss any statistically significant patterns I discover in the market, but my contrarian system is flashing green. I love buying into fear, so I'm wagering now is a good time to long.
Disclosure: I'm long FXI and BRF. No guarantees. No refunds. You'll probably lose money from following random strangers on the internet.
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