The U.S. initial jobless claims plunged to 255,000 last week, the fewest in 40 years. The 4-week average of jobless claims decreased to 278,500, and has been this low for the longest period in 15 years – the first time this happened since 1999-2000 (see chart). Employers added 223,000 jobs in June, helped push the unemployment rate down into the full employment range.

All of these measures indicate that the job market is as robust as it has only been at times of strong economic growth. They also suggest that stronger consumer confidence and spending will likely follow on the hills of the strong job market. As part of Model Capital’s fundamental, froward-looking approach to tactical management, we measure the effect of fundamental factors like these (as part of our statistical model) to forecast near-term return for major risky asset classes such as the S&P 500. After all, fundamentals drive markets.

Model Capital Management is a tactical investment manager. Please visit the following web pages for more information on Model Capital’s approach to tactical investment management and our tactical management SMA strategies.