Oddly enough almost a dozen of the last 15 closes in the broader market have been with a 120 basis point range on the SP500.

Interestingly, late last week, we had a 3% drop and all sorts of terrible headlines due to the now age old fear of “rising interest rates.”

Then on Friday, (yes, the very next day), after a decent jobs report, we had nearly the same 3% rally back, this time apparently based on the idea that is was now nearly assured we would indeed get the first interest rate increase since 2006.

If you think that sounds crazy when re-reading the above – don’t fret – because it is crazy.

Useless Concerns

While the geopolitical front continues to travel down a sketchy pathway the world over, there are good things happening here. Meanwhile, here is the thing about where the macro picture stands – leaving out the pages of pages of rambling that can go into this “analysis”:

The latest jobs data, earnings data and GDP updates suggest the US is growing between 2 and 2.5%. That is not barn-burning speed but we should note to ourselves that it can go on at this pace for a very, very long time.

While many have spent far too many hours complaining about the subpar nature of our recovery, too many still are missing the benefits. Trillions in the bank, savings moving back to a healthy clip, retail sales solid and earnings OK are all items that at other times in the past would have been deemed miraculous.

2016 Headlines

It is that time of year. The time when all the experts come out with their list of predictions.

We all know we cannot know the future.

We all know logically that “prediction” is a somewhat more intelligent sounding version of the word “g.u.e.s.s.” Yet we still seem to gravitate toward the headlines that speak of some knowledge of the future.

Here are a few from some major websites over the weekend:

“2016 Set to go Nowhere”

“Wall Street Expecting Paltry Returns”

“Never Go Against the Fed”

“Big Cap or Small Cap – Both Set to Struggle”

“Headwinds Strong for 2016”

The bottom line is this: those hoping to get a break from the never-ending droning on of bad news and trepidation may need to wait for 2017 as the force has started early for 2016.

Review this previously sent video as a reminder of tailwinds we benefit from….

The Lesson?

The last few weeks are a good example of how strange it has become. Not much has really changed.

Yet, we have had multiple days in a row where the point change is well over 100 points and in opposite directions. All that energy spent and we are where we were at the start of November – or worse, the same place as on 20++ different occasions during the summer and late Spring.

In essence, the crowd is being moved from one emotional swing to another with little to no real headway. It has led the HFT guys to push more and more volume around to cover smaller and smaller steps up the mountain.

I’d love to think we can get one more push into the red but I suspect those days are running thin.

Was Friday telling us that money has accepted a rate hike?

Part of me sure hopes so as it would be nice to get off the “fear of a rate increase” drug habit and move into more sound, long-term investment thinking.

Jobs Solid and Steady

Our friends at Calafia had some great charts to highlight what is being missed by most as a robust foundation.

It was not too many months ago that the masses thought jobs were terrible. Many high-tech industries of the future are starving for applicants. Quite a change and almost completely overlooked as yet another sign of Gen Y and Gen Z seeping into the landscape of the future.

Here is what we want to focus on heading into ’16:

Jobs have been growing at slightly more than 2% a year for a number of years.

We’re still mired in the “weakest recovery ever,” but the private sector has created a lot more jobs in the current business cycle expansion than it did in the prior one.

If there is one important point here, it is that this is NOT a fragile economy.

“The November jobs number was marginally better than expected, and with upward revisions to prior months it adds up to … pretty much the same kind of growth we’ve seen in recent years. There’s nothing to get excited about – unless, that is, you were worried that the economy was slowing down and at risk of deterioration given that the Fed is almost sure to begin raising short-term interest rates in 12 days.”

The charts above show the monthly change and the year over year rate of growth of private sector jobs. Jobs have been growing at slightly more than 2% a year for a number of years.

We’re still mired in the “weakest recovery ever,” given that real GDP is about $2.6 trillion below its long-term trend, but as the chart above shows, the private sector has created a lot more jobs in the current business cycle expansion than it did in the prior one.

see this video on our thoughts as to why?”

The net gain in jobs since late 2007 is now 5 million, which tops the 4 million rise in jobs from late 2000 through late 2007. From t he low in early 2010, the private sector has actually created about 14 million jobs.

That’s not so bad, and it at least makes you question why so many continue to moan and groan about how terrible the economy is.

Sure, we could and should be doing a lot better, but there is no denying that we have made considerable progress despite all the headwinds (e.g., high tax burdens, huge new regulatory burdens).

If there is one important point here, it is that this is NOT a fragile economy.

It’s an economy that has been growing at a slow but relatively steady pace for over six years, and there is no sign yet of any deterioration.

When the Fed raises the interest it pays on excess reserves later this month to 0.25% , the impact on the economy is going to be de minimis.

In fact, it might even be positive, if for no other reason than markets might become a little more optimistic about the future now that the Fed is demonstrably less worried.

Closing Thoughts for Now

Let’s face it, it has not been a fun year for the value investor. Patience has been thin and the internal bear markets amongst some sectors have been rough. Some of the most effective long-term investors I admire and have had the opportunity work with over the years are feeling the pain as well.

History suggests years like this are often followed by solid surprises to the upside.

Patience and time fixes most of these ills. The economy should get an Academy Award for performance given the headwinds it has had to muster against.

That too will change as 2016 ages like a good fine wine.