And today we are getting August same-store sales from the retailers, which are largely better than expected. We also received weekly Initial Jobless Claims and Continuing Claims. These figures, which were roughly in line with the consensus estimates, continue to suggest that the labor market is struggling. Most recently, Pending Home Salescame in at +5.2%, providing hope for those pipe-dreamers that everything will be fine for housing.
And so here we stand, with the markets oscillating between positive and negative territory as we await the granddaddy of them all: the monthly employment data.
Nobody is expecting much tomorrow as the consensus estimates stand at a -100K change in Non-Farm Payrolls and a scant +42K change in Private Payrolls. The Unemployment Rate is expected to tick up slightly to 9.6% from 9.5%. Has the bad news been priced in? Will anything short of a double-dip recession lead to more buying the likes of Wednesday's rally? Do the bulls have the upper hand?
Our conclusion is that notwithstanding our continuing concerns with the housing and labor markets, valuations are attractive for high-quality, blue-chip multinational companies. In most cases these companies offer dividend yields at or better than the 10-year Treasury yield. However, stocks offer a high probability of long-term capital appreciation whereas longer-term bonds are at risk of meaningful depreciation if and when interest rates rise. So we are buyers at these levels, but we remain buyers of quality. Relative valuations for high-quality companies have rarely been better, and we expect to be rewarded over the long term.
Michael K. Farr is President and majority owner of investment management firm Farr, Miller & Washington, LLC in Washington, D.C. Mr. Farr is a Contributor for CNBC television, and he is quoted regularly in the Wall Street Journal, Businessweek, USA Today, and many other publications. He has been in the investment business for over twenty years.