The U.S. has lost an important part of its global leadership role. The G7 and IMF lack legitimacy and credibility. And the G20 is still working on its operational effectiveness. All this speaks to continued uncertainty and volatility -- economic, financial, political and social. Since the world starts naturally long risk assets, we could well see more investors seeking less risky asset allocations, including cash in what they deem as "safe jurisdictions." In the process, valuations -- for bonds, commodities, currencies, and equities -- could well diverge for a while from what many deem to be historically fair valuations. As Will Rogers is said to have observed decades ago, investors should be concerned with the return of their money and not just the return on their money.
With the Friday jobs report, you want to think about the nexus of jobs and policy in the longer term, which in this case asks, "what did the administration do to offset the massive contraction in labor demand, aka the Great Recession?" The answers to that are the Recovery Act, financial and auto rescues, unemployment insurance extensions, payroll tax cuts, and more. Those measures demonstrably pulled the recovery, tepid as it is, forward, saved and created millions of jobs, and hastened the turnaround in net jobs growth. You might also want to note that Republicans have generally tried to block all of the above, and since 2010, have successfully blocked efforts like the American Jobs Act to do more to help offset the residual drag from the downturn. In that regard, their fingerprints are the most prominent ones on the current slog.