My conspiracy guess

It is again a jobs report week that on Friday, the government will issue the data how the labor market looks like. The most watched figure is about the non-farm payrolls (NFP). A strong NFP suggests more hiring, a good sign for the economy and may trigger a rate hike in Sep as the market is currently thinking. So what will we see in 2 days? Well, guessing about the job data, especially the market reaction to the data, is almost suicidal. There is no way to predetermine how the market will react as good news could be good or bad and the threshold of good vs bad is anyone's guess. It is all emotional. But still, let me try to guess and actually I have a conspiracy theory in my mind. I think the government will report a NFP that is good enough to show that the economy is apparently improving but at the same time, the NFP is not strong enough to provide the FED sufficient excuse to not to raise the fund rate in Sep. Although the market is very nervous about the possibility of a rate hike in Sep, personally I think there is zero chance this will happen. You really think Yellen wants to be viewed as trying to influence the coming presidential election in Nov? She is clever enough not to do so but she needs good excuse for doing nothing.




So what will be the beneficiary if my theory comes true? Gold for sure! As I have expected for weeks, gold is due for a meaningful correction and indeed we are likely seeing it happening now. While I don't think the correction is already done and more pain is likely ahead of us with more downside for gold, in the very near term, gold and its stocks are very oversold due to the concerns of an imminent rate hike. It is due for a fierce rebound and the Friday NFP may be the catalyst for this rebound. Let's see how this drama is unfolded on Friday!