Do Stock Market Highs Bode Well For Payments?

Stocks may have enjoyed a bump on last Friday’s jobs report, but you should let the bubbly chill for a while. The June numbers were enough to erase some less-than-stellar gains in the previous two months. Certainly the headline was a good one, as employers added 287,000 jobs in the latest tally.

And, what Brexit? How soon they forget.

Thus, stocks have hit all-time highs, with some sanguine fallout from the 2 percent to 3-percent growth that some economists and analysts expect to see in the third quarter of this year, which would conform to long-term averages.

But then again, what if the euphoria is a bit, well, misplaced? Not all signs point toward continued new highs, at least as far as equities are concerned. There are a few bits of data that could be of concern, for payments – and consumers – especially. Consider the fact that China’s June exports and imports were both down a bit more than analysts had expected, with both down in mid-single digit percentages, as measured by dollars. That may indicate that demand is weakening, both from within and without the country.

One data point does not make a trend, but also take note of the fact that employment growth for June in the U.S. would bring the rolling average of job creation, as measured by the last few months, to less than 150,000. The pace last year? More than 220,000 on an average basis. If this is a longer term “normal,” then shall we assume there is less firepower for, say, credit use (and payments), amid a backdrop where banks are tightening credit already, and that China might not be able to pick up the slack?

Earnings season is about to get underway, too, which is more than likely going to show a fourth straight quarterly decline in profits – and if firms aren’t seeing bottom line leverage, they may be slow to dole out new positions, or much in the way of payroll hikes.

It’s nice to see new highs in stocks, but it might not be nice to chase those highs.