Barbara Reinhard, CFA
Senior Managing Director, Chief Investment Officer, Multi-Asset Strategies and Solutions
Strong economic data continues to come out of the U.S. Last week, the Bureau of Labor Statistics released data showing that the labor market added 303,000 nonfarm payroll jobs in March, far exceeding expectations of 214,000. The unemployment rate also ticked down from 3.9% to 3.8% and annual wage gains slowed to 4.1% from 4.3%. The current labor market is one of the strongest in history—the economy has added jobs for 39 consecutive months and the unemployment rate has remained below 4% for 26 months in a row, the longest streak since the 1960s.
In hindsight, it’s undeniable that the recent U.S. stock market rally was entirely justified and based on anticipated economic strength—another textbook example of the markets being forward looking. However, the risk/reward ratio has probably shifted now that everyone is optimistic and securities are priced for perfection. These are the times to be careful and keep our eyes open. But at the moment, there doesn’t seem to be any obvious signs for concern, which would imply that the logical positioning seems to be a continued, but cautious, overweight to risk assets.
Maverick Lin contributed to this article.