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A Strong Jobs Report Could Crash Stock and Bond Markets

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Equity markets are finally beginning to accept that interest rates will move higher in September.  While the ADP jobs report came in below expectations today, the ISM non-manufacturing index came in very hot and the PMI Services Index came in above expectations. After the release of this data and bullish talk from a Fed governor the Dow gave back 100 points of a early gain and the 10 year treasury yield moved higher.

As we watched the MLP segment get hammered hard again today and seeing REIT’s follow suit it made us believe that a strong jobs showing on Friday will be the final determinant leading to a interest rate hike next month. For whatever reason almost everyone was looking for a December hike–which in our opinion is one of he reasons Yellen is so anxious to raise rates–a need to exert authority over the markets.  Of course there is a chance that the jobs report will be weak on Friday thereby allaying fears – but we are not counting on it.  Maybe just now is the time for a full 10-20% equity correction–finally.

This is a very scary time–and we will be happy when the weekend arrives.

 

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