Is this more evidence that the liquidity rally is alive and well, further widening the gap between the stock market and economic fundamentals? After the Fed struck a slightly dovish tone in its July monetary-policy statement on Wednesday, stocks rose 1.25% percent on Thursday.

By contrast, this morning, despite a disappointing headline number on job creation in July (see below), U.S. stocks are off by a modest amount, with the S&P 500 (SNPINDEX:^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES:^DJI) down 0.22% and 0.27%, respectively, as of 10 a.m. EDT. That's consistent with the market's "liquidity logic"; another weak economic data point simply comforts traders in the notion that the Fed could delay reducing its monthly bond purchases, a.k.a. "quantitative easing".

How bad were the employment numbers? Not disastrous, by any means, but hardly encouraging:

  • The economy added 162,000 jobs in July -- the smallest number in four months and lower than the median forecast of 185,000 in a Bloomberg poll of economists.
  • Employment gains for May and June were revised lower by a total of 26,000.
  • Both average earnings and the average workweek decreased.
  • The labor participation rate fell to 63.4% from 63.5%, indicating that people dropped out of the workforce (i.e., they stopped job-hunting).

A lower participation rate contributed to a fall in the unemployment rate from 7.6% to 7.4% -- a larger decline than economists had been anticipating (the unemployment rate forecast was 7.5%).

Google goes Moto
On Thursday Google (NASDAQ:GOOGL) launched what it hopes will be its iPhone-killer: the Motorola Moto X. Priced aggressively starting at $199, the Moto X is the first phone developed by Motorola since Google acquired the company last year.

Google claims the phone will hold a charge for 24 hours thanks to eight separate processors that enable the main processor to sleep while lower-power chips peform other tasks in the background, such as tracking location or listening for voice commands -- even if the phone is locked or sleeping, users can still launch functions by voice.

Another differentiator: The Moto X will be manufactured in Texas, rather than Asia, which will allow users to select a wide variety of customization options.

Will this be enough to hurt Apple's iPhone franchise? It's too early to tell, but this latest offering highlights the intense competition Apple now faces in this extremely profitable business.