The Jobless Recovery Is Dead

But wait...The news gets better. In March, the Labor Department reported new payrolls of 308,000, a spectacular number for sure, but the March revision numbers also came out yesterday tagging an additional 30,000 jobs to that figure...and February, well, the revision numbers were 80% higher than what was first reported.

The 625,000 new payrolls added in the last two months represents the strongest back to back months of job growth in four years dropping the unemployment rate to 5.6%. As a comparison, the all knowing European Union's unemployment rate is 9% with France, the land of whine, I mean wine, coming in at 9.4%.

While this employment data is great news for America and for long term equities investors, the stock market is likely to feel the pressure of an interest rate increase as soon as June. The stock market has been trading in a channel for weeks now and this new data could cause a short term break of support.

The continual influx of positive economic data make the likelihood of a Fed rate increase almost 100% by August with analysts now leaning toward the next meeting at the end of June. Futures trading suggest a near 90% chance of a rate increase after the June 29-30 meeting.

The Market has already worked in a 25 basis point hike for August but has not accounted for a hike in June. If the rates do increase in June it is still highly probable that August will bring another hike. By the end of the summer, the Fed Funds rate could increase by 50% to 1.5%. Greenspan told the world last week that when rates begin to increase they will not be done in a dramatic manner, but in a slow calculated step up.

Congratulations to all of you who found new work last month and kudos to those who refinanced their homes in the nick of time. America is back to work!

Luke Hodgens is the editor of
Powerhouse Profits a conservative investment newsletter. Click here to read more of his cogent analysis."