Strong Jobs Report Fuels Friday Rally
- Jobs reports leads to the Dow’s best performing day of the year
- Headline jobs report strong, but wage growth disappoints
- New admin delays changes to fiduciary rules
Both indices were helped by strong Friday rally, with the Dow gaining almost 1% today, its best day of 2017. On the week, the Dow lost 0.1% while the S&P 500 increased 0.1%.
The January jobs report came in well above expectations. The economy added 227k net new jobs in January, well ahead of the 175k consensus estimate. Construction hiring was noticeably strong as well, which is generally a positive for the overall economy. However, the Northeast had a very warm January, so it’s likely weather patterns allowed for more construction work than a typical January. It wasn’t all good news though. Wage growth was a paltry 0.1% on a month-over-month basis. Last month’s wage growth figures were revised down as well. Wage growth was still a reasonably healthy 2.5% over the last year. We’ve seen steadily improving wage growth over the last six months, so hopefully this month’s data is just a blip. The unemployment rate moved higher to 4.8% as more people returned to the labor force. Read More
I have always had a fiduciary responsibility to clients and will continue to going forward. That means, as a Registered Investment Advisor (RIA), I am legally required to put your interests ahead of my own. This is important for many reasons, but one of the most important is the use of high-fee products like front-end load mutual funds, unit trusts, annuities, etc. All of those products pay very generous commissions to advisors that would be hard to argue were in your best interest. Most advisors (Fidelity, Schwab, Edward Jones, Bank of America, etc) have never been held to a fiduciary standard, instead they are only required to put client assets into ‘suitable’ investments. Suitable is a very vague term open to significant interpretation, including many high-fee investments. Over the past year, the Obama administration put together new rules requiring all retirement accounts to be managed with a fiduciary obligation. This new rule was supposed to take effect in April, but the new administration is delaying/cancelling the new rule. There are legitimate reasons why a broker-dealer firm would struggle to provide a fiduciary responsibility, but clients would definitely benefit. Strangely, this is a good thing for me because having a fiduciary responsibility to clients is a good selling point relative to other advisors, but it’s not good for most customers. RIAs only make up 5-8% of total advisors, so most Americans do not benefit from the protections of an advisor who’s a fiduciary. Read More
Oil increased this week, closing up 1.2% to $53.83/barrel. The yield on the 10-yr Treasury remained flat, closing at 2.48%, the same as a week ago. The average rate on a 30-yr mortgage also held steady at 4.19%.
|10-yr Treasury (∆ in bps)||2.48||0||3|