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Well, it's finally here - Jobs day. To be sure, this is the Big Kahuna of economic reports these days. The Nonfarm Payroll data is closely watched as an indicator of both economic health and a "tell" for the Fed's future monetary policy moves. So, let's get to the numbers.

After last month's shockingly weak jobs report, the nonfarm payroll numbers for June came in like a breath of fresh air. The Labor Department reported that 287,000 new jobs were created last month, which was well above the consensus estimate for 180,000. The 287K was also above the highest estimate in the Bloomberg survey, so it is easy to say that this was a positive surprise.

The June jobs data (which was helped by 170,000 striking workers at Verizon returning to work) follows the May report where just 11,000 new jobs were created - which was actually revised lower from 28,000. But even if the returning Verizon workers are removed from the mix, the June job creation total was the best of 2016.

The report showed that the private sector created 225K new jobs in June and that average hourly earnings gained +0.1% (this tells us that workers are making a bit more money each month).

However, the unemployment rate actually rose by 0.2% to 4.9% as more people sought work and the labor force participation rate ticked higher to 62.7%.

While the report is being viewed positively by the markets in the early going, the argument over what the Fed will or won't do next will undoubtedly continue unabated. Some will argue that June's payroll numbers support the idea that May's report was a one-off while others note the 3-month average has fallen to 147K per month which is down significantly from the levels seen at the beginning of the year.

In any event, stock futures are pointing to a higher open on Wall Street before the bell. However, the question of the day is if the jobs report will provide the firepower the bulls need to break out of the current range. Personally, I'm not so sure this will do the trick. But remember, in the stock market, it's not the news, but how the market reacts to the news that truly matters. So, stay tuned as this might be interesting.

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Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of Global Bank Policies
      2. The State of U.S. Economic Growth
      3. The Impact of the "BREXIT"
      4. The State of the Stock Market Valuations

Thought For The Day:

"I learned everything I needed to know from John Cougar, John Deere, John 3:16" --Keith Urban

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Here's wishing you green screens and all the best for a great day,

David D. Moenning
Founder: Heritage Capital Research
Chief Investment Officer: Sowell Management Services

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