One of Pacific Investment Management Company's (PIMCO) elite brain trust Mohamad El-Erian coined the phrase, “the new normal” six years ago when characterizing the future returns for equity investors. Basically after all his in-depth research, analysis, modeling and magic wand he stated equity investors would need to adjust to future returns of 5% or so. Mr. El-Erian is undeniably a very intelligent fellow which, up to this point in time had a very solid record. Mr. El-Erian fell victim to his conviction. Meaning even as the markets raged forward he continued to dig in his heels stubbornly clinging to his “new normal” theory costing his investors and followers hundreds of billions of dollars and some years later his very own job. The underlying theme here is the markets are always right so, as investors we need to be humble, flexible and when called for quick.

The U.S. economy is no longer a good house in a bad neighborhood. We are the Bentley in a used car lot. The U.S. economy for the trailing two quarters is averaging better than a 4% expansion rate of growth with the current quarter estimated to be tracking at close to 3%. This would give us a three quarter average of better than 3 ½%. Take that when comparing the U.S. vs. the Eurozone's blistering pace of +2%, Japan at -1.6% contraction, the United Kingdom's +.7% and Russia at +.7%. The U.S. economy, now after five years of repair from a bruising and painful recession, is now finally starting to fire on all gears. So, where are we. Let's get to it.

Jobs

The Non-Farm Payroll figures were released this morning and they were stellar coming out at +321,000. There was strength across the board. Average hourly earnings registered a +.4%. The average workweek pushed higher to 34.6 hours. Importantly the jobs created were good paying solid jobs with Business and Services adding 81,000 to head count and Healthcare and Manufacturing added 28,000 and 29,000 respectively. No two ways about it a very strong number. We'll wait for the January release to see if this was a one off number, if this November number is followed up with another very strong number we may need to rethink the timing of the first Fed rate hike.