Friday's jobs number disappointed markets, leading to major declines in yields and equity indexes. Is the recession that has been forecast for going on 2-3 years finally upon us? The narrative is currently centered around the Fed being late to cut and how they'll now need to cut aggressively to stave off recession. Some are even calling for an inter-meeting cut. Are we really at that stage after this jobs report? It's a very Fed-centric narrative to say the least.
You'll hear plenty more talk about the Sahm rule being triggered and whether that will lead to recession, or according to Sahm, maybe not as this triggering is not caused by people losing jobs vs. an increase in the labor force. I'll let economist figure out whether that matters.
What else do we have out there, oh yeah, unwind of Yen carry trades, see USD:JPY back at 145, remember 160? Tough to be short Yen with that move and you might be forced to sell whatever assets you were financing with the Yen short. Anyway, Japanese markets looking rough at the time of this writing. Remember back in January when the Japanese stock market hit a 34 year high finally reclaiming it's 1989 level, no you don't. But I wrote about it here. Hopefully it doesn't take another 34 years to reclaim the recent highs, but it's been a violent move lower over there.
Other narratives, Buffett selling Apple, that's apparently not bullish for tech stocks.
Let's also not forget about tensions in the Middle East and whatever narratives we have around domestic politics as the U.S. Presidential race tightens.
On the week ahead it's a little light with ISM Services. It will be interesting to see how officials from the all powerful Fed talk about the Jobs report and the rate cuts the market have quickly priced in.
Monday: Goolsbee, ISM Services, Daly
Tuesday: trade data, 3Y Auction
Wednesday: take the morning off, come in for the 10Y Auction
Thursday: jobless claims, Barkin
Friday: take another day off
XTOD: This is the biggest market decline since the last decline you don't remember or care about anymore.
XTOD: Interestingly, most of Friday's bond easing was to inflation breakevens. The nominal 10Y yield fell 19bps, but the 10Y TIPS only fell 3bps. The 5Y was a qualitatively similar story.
XTOD: “History never repeats itself. Man always does.” - Voltaire
We are in that part of the market cycle where all past corporate governance misdeeds are being overlooked and stocks of promoters who are promising multi-year high growth guidance inspite of negative OCF are soaring.
XTOD: As of today, it appears as though we are headed into a recession. You know what is going to get smeared in a recession? Private equity. Low exits are going to no exits. Then what? More to say on this in the coming days. Enjoy your weekend.
XTOD: The whole marketplace is pricing exceptionally high probability rates are going down by a lot - which is just consistent with recession pattern. Rate cuts don't do anything (pure superstition) so the higher unemployment goes the lower the Fed will go chasing it.
XTOD: Your paycheck is the drug that makes you forget about your goals and passions.
https://x.com/ernietedeschi/status/1819830422764994598
https://x.com/Gautam__Baid/status/1819408121972035622
https://x.com/dailydirtnap/status/1819447117745999965
https://x.com/JeffSnider_EDU/status/1819878005117771948
https://x.com/_Eduphile/status/1818685126672367732
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