Another new month has come, and another disappointing jobs number has been reported out of the United States.
There is no doubt the U.S. has been creating jobs, but at a much slower pace than most would have hoped for. The headline jobless rate in the U.S. fell to nine per cent from 9.4 per cent in January, but that number is misleading since many more individuals have just given up looking for work, and thus have not been counted.
In Canada, the numbers were actually quite good, with 69,200 jobs created for the month of January. The interesting thing is that even though more jobs were created than anticipated, the unemployment rate increased to 7.8 per cent from 7.4 per cent. Perhaps this number is so high because more people are back trying to find jobs once again.
Earlier last week, the U.S. came out with strong jobs data and great manufacturing numbers. This data failed to really ignite a strong rise in the markets. Friday’s jobs report was quite disappointing, yet this information also failed in getting a strong response from the markets.
What should that be telling us? Has the market finally caught up to itself in terms of growth? In my opinion, the market tends to look six to 12 months ahead to decide on whether it should rise or fall. Over the past three or four months, the North American stock markets were rising because it was believed the economy would get better, and it has.
I believe the North American markets today are telling us that all the recent good economic news has been factored in already, and thus the equity markets are looking for the next catalyst to take it to the next level. Perhaps a lot of sideways movement is what we should expect from the Canadian and U.S. stock markets over the coming months.
Many analysts and investors have commented that they expect a minor pullback for the major North American exchanges. As always when the stock exchanges climb very high very fast, it is inevitable to hear calls for at least a slight correction. However, in my opinion those that have positioned their portfolios for such a correction have lost out as the market continues to rise.
Therefore, as always, it is never a wise decision to try and time the markets. Momentum for the broader North American equity markets has been, and still is, clearly to the upside. I recommend investors continue to take advantage of a positive low interest rate environment and a corporate America that has more money on its balance sheets than we have seen in many years. There may be issues that will arise this year like any other, however in my opinion 2011 looks pretty good so far.
If you have any questions regarding the above article or are looking for an investment adviser to help you with your portfolio, please visit my website at www.investmentadvisorgta.com. I will be glad to speak with you!
Allan Small is an Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company. This is not an official publication of Dundee Securities and the author is not a Dundee Securities analyst. The views expressed are those of the author alone, and are not necessarily those of Dundee Securities or Metro Canada.
