Warsh Signals Possible Rate Hike Despite Weak Jobs Report

Last week's job numbers were a disappointment, far worse than expected. In fact, there were only 23,000 jobs added in July, when economists had predicted a gain of 80,000. This significant miss suggests that the economy may not be as strong as many believe.

Despite this weak jobs report, Federal Reserve Chair Kevin Warsh has indicated he won't make decisions based on just one data point. He's committed to getting inflation down to 2%, and sees raising interest rates as a key way to achieve this goal. Inflation may be coming down, it cooled from 4.2% to 3.5% last month, but Warsh views this progress as temporary.

There are many factors at play, including the S&P 500's strong performance so far this year, which has risen by 13%. This marks another above-average gain for the index relative to its long-run average of about 10%. The market may be overdue for a correction or pullback, and investors should consider diversifying into value-oriented assets to reduce risk.