February Jobs Report

By Jeffrey Arsenault of Old Greenwich, CT The winter of scarcity is over as February sees the economy beating dismal forecasts and adding 175,000 new jobs to its roster. According to The New York Times Nelson D. Schwartz, [t]he American economy appeared to emerge from a winter hibernation in February, creating more jobs than in either of the previous two months and suggesting that momentum in the labor market might gradually build with the arrival of spring. Though experts are wary and leaning towards the side of caution when it comes to interpreting Februarys numbers, the increase in jobs did ease fears of another prolonged slowdown, which had been raised by weak figures for hiring in December and January and mixed signals from recent releases of other data. Schwartz notes that [t]he improvement last month led some experts to conclude that a hard winter, not a fundamental downshift, was the prime mover behind the economys lacklustre performance at the end of 2013 and the beginning of 2014. CNN Moneys Annalyn Kurtz reports that due to inclement weather throughout much of the country last month, [e]conomists had been expecting a weaker jobs number This is because [i]ce and snow can postpone hiring if businesses close, or even cause a decline in outdoor jobs, like construction. Surprisingly enough, the opposite actually occurred as hiring picked up across many sectors, construction included. Construction added 15,000 jobs, restaurants and bars added 20,100 jobs and education and health services added 33,000 jobs, reports Kurtz, adding that offices are also hiring. By far, the strongest hiring came from professional and business services industries, which include accountants, architects and technology workers. This sector alone added 79,000 jobs last month. Secretary of Labor Tom Perez, according to Kurtz, has called hiring in this sector, "easily the strongest aspect of the jobs report adding that, These are well-paying jobsIt's a bellwether of the bullishness of business to expand." As for the senior fellow at the Brookings Institution, Justin Wolfers, Kurtz reports that he said this on Twitter: Its just a steady-as-shegoes recovery. Not fast enough, but not easy to derail. The [jobs] report beat most expectations, pumping stock futures ahead of the markets opening bell, reports Paul Davidson of USA Today. However, he also points out that despite the job market recovering after a two month slump the unemployment rate rose from 6.6% to 6.7%. Despite the solid payroll advances, the unemployment rate, which is derived from a different survey, ticked up in part because the labor force rose by 264,000, including previously discouraged workers who resumed their job searches. Experts expect to see a recuperation occur as hiring picks up and workers who had stayed home due to foul weather the past months return to their jobs. According to Davidson, RDQ, in a research note, said: This report suggests that the underlying momentum in the economy is solid and our feeling is that there is still a significant catch-up payroll report lurking out there in the spring. Davidson adds that according to the firm, the job gains are likely more than enough to prompt the Federal Reserve to continue to taper its bond-buying stimulus program at a March 18-19 meeting after a weak economic data in recent months raised questions about a pullback. According to Hibah Yousuf of CNN Money, Stocks ended mixed Friday (March 7), as the enthusiasm following better-than-expected jobs report wore off. The Dow rose 0.2%, while the S&P 500 added a single point. But that was enough to finish at another record closing high. The Nasdaq ended in the red, as big declines in biotech stocks weighed on the index. Biogen Idec and Vertex Pharmaceuticals fell about 3% each, and Gilead Sciences was also [went] down

sharply. Yousuf notes that there is some concern over the future of the market as the five-year mark of the current bull market fast approaches. Some investors worry that stocks are overdue for a pullback but the bulls say theres [still] more room to run. As investors made bets that the Fed will taper again at its meeting later this month, they dumped Treasuries, pushing the 10-year yield up to 2.8% from 2.73% late Thursday (March 6), reports Yousuf. Bond yields and prices move in opposite directions. And rates often go higher when economic data is improving. Deloitte CFO Frank Friedman said his company is planning to hire around 19,000 workers this fiscal year, ranging from a campus kid coming off an undergraduate degree, to a very experienced person that comes in as a partner, writes Kurtz. Friedman reportedly said that: We are going to continue to hireOur business continues to be good and we're optimistic." Another cause for optimism is the significant increase in the average hourly earnings. CNN Moneys Christopher Matthews notes that the the report's single biggest surprise was a significant jump in average hourly earnings, which rose by 9 cents to $24.31, about twice what economists were expecting. The increase might seem paltry, but Matthews points out that over the past 12 months, average wages have risen by 52 cents, or 2.2%. If you consider that prices overall have risen just 1.3% over the past year, it's clear that, on average, worker pay is outpacing inflation. That's great news in an economy in which the biggest problem is a lack of demand. Kurtz reports that, according to Ellen Zentner, senior U.S. economist for Morgan Stanley: Rather than gains in equities providing impetus for the wealthy to spend, stronger wage growth will help boost spending across all income groupsThis will be a key underpinning for consumer spending and economic growth this year."

Jeffrey Arsenault, Principal and Founder, Old Greenwich Capital Partners, LLC. Mr. Arsenault brings more than 25 years of investment experience to the Old Greenwich Capital partnership. Prior to launching Old Greenwich Capital Partners (OGCP) in 2005, he was a partner at Paradigm Capital, Inc., a Canadian investment boutique, where he successfully launched and established a U.S. presence for the firm. Mr. Arsenault began his career in institutional sales at Gordon Capital, where he worked for five years prior to moving to CIBC World Markets. After a successful run at CIBC World Markets, Jeffrey became Director of Institutional Sales at Merrill Lynch. Through his professional career, Mr. Arsenault has established a close network of associations throughout the investment community allowing him to identify and access valuable information. For many years, Mr. Arsenault has researched the needs of investors and managers and as a result developed a technical investment management framework that allows him to source, analyze, monitor, and assess the best breed of mangers in the industry, and to deliver positive alpha returns to Old Greenwich Capital Partners clients. Jeffrey graduated from Boston University in 1985 with a Bachelor of Science in Business Administration while being part of the university mens soccer team. To this day, Jeffrey remains highly involved in Boston Universitys Athletic Directors Council and Boston Universitys Metropolitan Dean Advisory as a board member. Furthermore, he also serves as a board

member of the Stepping Stones Museum for Children and Sound Point Capital and finds the time to manage a family of five children along with his lovely wife.