Though the Jobs Report is Dismal, That’s Not the Real News

This morning a weak jobs report came out, sending stocks down and bonds up. That’s pretty normal behavior in the markets. However, emerging market stocks and bonds were actually up on the news, based on the assumption that the dollar will suffer because the Fed will be more hesitant to raise interest rates in the short-term. Whether the market is “right” on any of these over the short-term remains to be seen, but there is another, arguably more important point to take away from this morning’s markets.

Diversification seems to be working again.

Contrary to some viewpoints out there, diversification does matter and all “risk” assets do not always move 100% in tandem.

Table of US vs Emerging Market Returns for June 3rd, 2016