In yesterday's note I suggested that a good jobs number this morning could spell bad news for stocks:
"Suffice to say that it (a strong jobs number) has the potential to throw some cold water on our positive-resolution-will-lift-stocks thesis, but not in the way you might think... Meaning, if the jobs number is really good, and the Hormuz news says smooth sailing to come, there's a chance that yields could actually rise in response."
Well, the headline (+172k) number was nearly double the consensus expectation (+88k), and, yes, stocks are feeling it this morning... The S&P 500 is down a full 1% as I type, while the Nasdaq 100 is down a whopping 1.97%... The Dow, on the other hand, benefiting of late from a rotation out of tech and into healthcare and financial names in particular -- is only down 0.33%.
As for our core allocation, it's feeling it as well... While our US financial and healthcare ETFs occupy our second and fourth largest positions respectively, declines in our global tech exposure, along with our SP500 call strategy (all of which has contributed notably to our positive year-to-date results) are overwhelming the gains in the former... But, like I also said yesterday:
"Bottom line: This is just a potential heads up, I actually wouldn't lose any sleep over it either way, at this juncture... Tomorrow's jobs number -- whether it's good or bad short-term for equities -- wouldn't shake us lose from our short-term thesis."
Suffice to say that what had become overbought (extended to the upside) conditions in the global technology space is meeting up with profit-taking amid uncertainty around the ongoing freeze of global oil traffic and what that means for inflation and interest rates in an economy that clearly is not rolling over, alongside some newfound worry over the justification for the hundreds of billions being, and scheduled to be, spent on AI capacity.
We'll dig deeper into the weeds in our weekend macro update.
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