Sell in May and go away? Not when Goldilocks is around

GOLDILOCKS is back in town and she's throwing a party. The only question is whether the US consumer is going to show up.

On Friday, US stocks staged one of their biggest rallies of the year, finishing near records as traders revelled in a jobs report that was neither too hot nor too cold. This state of affairs is known as the "Goldilocks" economy. Should retail sales and industrial-production data provide more readings of economic growth at the "just right" tepid temperature, major indexes could break out of the tight 2015 range and surpass those records this week. Rather than the traditional summer swoon, stock investors could be in for a fairytale season.

Roughly 223,000 jobs were added in April, and the unemployment rate fell to 5.4 per cent, according to the Labor Department. That was the hot part, alleviating fears that the likely contraction of the US economy in the first quarter would be a lasting problem. The tally for jobs growth in March, however, was revised down to a mere 85,000. Another "cold" feature of the report was the freezing of wage growth. Wage inflation is the early warning sign that economists watch to pre-empt inflation of consumer prices on supermarket shelves. Without wage inflation, the Fed is under little pressure to raise rates no mat…