Friday's Markets Update (May 5, 2023)

06 May 2023 by rate3

On Friday, after the markets stopped worrying (at least for a while) about the Fed rate, good news suddenly became good news again as traders refocused on the upcoming recession. The NASDAQ (o: 12073, c: 12235) as well as BTC (o: 28952, c: 29561) added 1.3% and 2.1% respectively during the daily session after the BLS published its employment statistics, which showed that the unemployment rate unexpectedly went down from 3.5% in March to 3.4% in April, reaching its 50-year low.

The unemployment rate is one of the most controversial of all lagging indicators used by the FOMC to make decisions on rate changes. While current BLS data shows it at 3.4%, with 5.7M unemployed persons, the rate doesn't include those not actively looking for work. This group, which increased by 346K to 5.3M, was not counted as unemployed because they didn't respond to the survey in the preceding 4 weeks.

Moreover, the number of persons not in the labor force but who wanted and had looked for a job in the past 12 months (but not in the 4 weeks before the survey) increased by 191K to 1.5M in April. Thus, we have at least 0.5M newly unemployed individuals unaccounted for in government statistics for various formal reasons. This exceeds the decrease of 182K in the number of unemployed people reported by the BLS.

Despite this, the markets, buoyed by big institutional players loaded with excessive liquidity throughout 2022, continue to rise, consistently dismissing negativity and overweighting positive news.