Jobs number was disappointing

First off, I wrote this on July 3rd but got distracted and forgot to post it. Sorry about the delay.

The US economy shed 467,000 jobs in June, which was worse than I thought it would be. The context for me is that I have been very bullish on the markets and I thought a steady improvement in the jobs number would fuel the markets. I did not think all the news would be good, because the economy is still clearly weak, but I have been expecting the mix of good/bad news to gradually improve.

The economy shed 322,000 jobs in May which, while still a bad number, was a real improvement. So how does this data impact my views? I'm still trying to sort that out in my own mind, but here are my thoughts. I am still bullish. Being in the job market myself, I have noticed a dramatic improvement in tone as I talk to potential employers and my friends in the investment community. Hiring is still very slow, but I am starting to see firms begin real searches and a friend of mine just got hired again. My guess is that if I worked for an auto manufacturer, dealer, or supplier, I would be observing the opposite trend right now. What I'm getting at is that I think there is starting to be improvement in some industries and continued weakness in others. My best guess is that the positive trend will resume in July, but the pace looks like it will be slower than I thought. I think we could see a -300,000 number in July.

Should this change my bullish stance? I don't think so. I am about the most bullish person I know right now and I would have to admit that I was starting to think a recovery was coming quicker than I originally thought. Yesterday's data was cold water on that increased optimism, but it still leaves me optimistic. I still think we are in the early stages of an economic recovery and I expect the markets to do well ahead of that recovery, and concurrent with that recovery. From a broader view, I want to own equities in this environment even with the understanding that there will be hickups along the way. Predicting those hickups with enough accuracy to trade them is very hard and I would rather try to get the bigger trend right.

The savings rate is up, so Americans with jobs are rebuilding their personal balance sheets. This will most likely mean that consumer spending growth will be anemic for quite awhile (maybe years), but it is setting us up for more stable and sustainable growth. I'm all for that.

The pipeline: On the docket for me are some research on Interactive Brokers and MF Global. I think I will have a chance to sell most of my GFIG stock at $8 within the next couple months so I'm looking for a place to put the cash. MF Global is a similar business, but with a higher risk profile because they act as clearing member for their clients and that does expose them to some risk. 95% of the time, I don't think that extra risk really matters, but it showed up about a year ago when a rough trader ran up huge losses on wheat contracts. The markets were already in witch hunt mode at the time and the stock was crushed. MF Global had to eat the loss and it uncovered some risk management decisions that were questionable at best, but also isolated to a very small part of their business. There was a period where I thought the sentiment had gotten so bad that their customers would all leave and the company would go under. That has not happened and risk management has been improved. Those of us that were burned by this stock will have a hard time buying it again, but I think it is time for another look.

Interactive Brokers is on the docket because I find myself considering opening an account there. I am currently a Schwab client and shareholder and am not looking to sell the stock, but Interactive brokers has a compelling value proposition and the stock looks cheap at first blush. More to come on both.