Morning Note: Under the Surface

This morning's headline jobs number came in better than expected, while the "internals" (distribution across sectors, hourly wages, participation rate, unemployment rate, etc) were close enough to expectations to not budge the needle with regard to Fed policy the next few months.

After yesterday's impressive rally in equities, it makes sense that today's report (in that it didn't deliver the kind of "bad news" [a weakening employment picture] that might have the Fed rethinking their tightening plans) would inspire some selling in response, which is what we're seeing in the pre-market action as I type.

Suffice to say that we're simply not presently experiencing a high risk of near-term recession, as many would have us believe. 

Now, that said, under the surface we're seeing/hearing more and more evidence that a not-small number of not-small companies are either slowing down the hiring or are considering cutting staff in the months to come. So it may very well be that we've seen the best of the jobs reports, at least for the time being. Which, if true, will amplify the volume from the recession choir in the months to come. And if that (a weakening employment, etc., backdrop) is coupled with stubbornly above-Fed-target inflation, and, therefore, continued determination to get it back to their 2% target, those higher-pitched recession calls would not be unjustified...

We'll leave it there (except for the numbers) for this morning... Our weekly economic update is on deck...

Asian equities were mixed overnight, with 8 of the 16 markets we track closing lower.

Europe's leaning red this morning, with 11 of the 19 bourses we follow trading down as I type.

US stocks are trading lower to start the session: Dow down 231 points (0.69%), SP500 down 1.21%, SP500 Equal Weight down 1.02%, Nasdaq 100 down 1.84%, Nasdaq Comp down 1.89%, Russell 2000 down 1.36%.

The VIX sits at 25.57, up 3.44%.

Oil futures are up 0.18%, gold's down 0.46%, silver's down 0.63%, copper futures are down 1.20% and the ag complex (DBA) is down 0.09%.

The 10-year treasury is down (yield up) and the dollar is up 0.15%.

Among our 38 core positions (excluding cash and short-term bond ETF), only 2 -- energy stocks and carbon credits -- are in the green so far this morning. The losers are being led lower by MP Materials, tech stocks, AMD, Dutch Bros and South Korean equities.

"We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within the cycles, and what’s likely to transpire."

--Dalio, Ray. Principles for Dealing with the Changing World Order 

Have a great day!
Marty