Friday, October 7, 2022

Morning Note: Bulls Want Less

So, new jobs came in at 263k against 255k expected. Manufacturing picked up 22k, unemployment 3.5% (from 3.7%), services picked up 244k (although retail actually lost 1,100 jobs). Average hourly earnings up 5.0% (as expected). 

Stocks are selling off in the pre-market on the news (as I type) -- the bulls, in the present "bad news is good news" environment, were obviously hoping for less... The dollar's up, bonds are down (yield up), as you'd expect.

Bottom line, nothing in the jobs market to sway Fed rhetoric right here. In fact, they'll no doubt leverage it to more than justify their present stance.

Next up, CPI next Thursday -- that's bigger for markets. Although it'll take something extremely surprising to sway the Fed from a .75% hike come next meeting, it's the signaling (offered up by the data) into next year's economic/inflation setup that'll move markets going forward.

I'll circle back later today with our weekly economic update and a look the stock market's technical setup.

Asian equities struggled overnight, with all but 1 of the markets we track (China's markets are closed this week) closing lower.

Europe is mostly lower as well so far this morning, with only 4 of the 19 bourses we follow trading up as I type.

US stocks are getting hammered start the session: Dow down 457 points (1.53%), SP500 down 2.09%, SP500 Equal Weight down 2.00%, Nasdaq 100 down 2.77%, Nasdaq Comp down 2.69%, Russell 2000 down 2.29%.

The VIX sits at 31.61 up 3.57%.

Oil futures are up 2.10%, gold's down 0.92%, silver's down 2.07%, copper futures are down 1.69% and the ag complex (DBA) is down 0.01%.

The 10-year treasury is down (yield up) and the dollar is up 0.29%

Among our 35 core positions (excluding options hedges, cash and short-term bond ETF), only 1 -- our energy stock ETF -- are in the green so far this morning. The losers are being led lower by AMD, Dutch Bros, Albemarle, our semiconductor ETF and tech stocks.

Ain't this the truth!!
"The problem is that our ideas are sticky: once we produce a theory, we are not likely to change our minds—so those who delay developing their theories are better off.
When you develop your opinions on the basis of weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions, even if this new information is obviously more accurate.
Two mechanisms are at play here: the confirmation bias that we saw in Chapter 5, and belief perseverance, the tendency not to reverse opinions you already have. Remember that we treat ideas like possessions, and it will be hard for us to part with them."

--Taleb, Nassim Nicholas. The Black Swan

Have a great day!


  1. Marty: thanks for today's updates. Have a great weekend!

  2. Quick question: how do you see CPI play out next week? It seems like I am paying a lot more for everything. The Shell gas station near my house is almost $8 per gallon. Consumer spending is still strong. People are still spending money after 2 long years of pandemic. I really think that CPI went down in the previous months was because of low oil price (but everything is up). With Saudi cutting 2million barrels of oil, we will be back to square 1, if not worst for inflation. In addition, the market doesn't seem to care about the War on Ukraine. But I think it is a huge problem for the market with the Winter coming and Biden screaming "Armageddon".

    1. Good points. Keep in mind, the Fed is supposed to focus on "core" which excludes energy and food... Of course, higher energy prices do bleed through to the price of other things... Had a conversation with a friend yesterday, the cost of containers from So. Korea from one of his business interests is now $2,000.. Was $18,000 just a few months ago... That sort of data (and it's happening in other places as well), will bleed through, in a disinflationary way, as well... Also, some huge retailers are holding huge inventories (which they'll have to discount), but that'll show up in later months I suspect... It'll be very interesting to see next week's CPI print...

    2. Great Information! Thank You!