Ignore the CNBC Market Sell-Off banner, sip your favorite tariffed tequila, buy a U.S. manufactured car - because it’s Friday and you ain’t got no job and you ain’t got shit to do.
Jobs Day in ‘merica! Estimates peg +160K, unemployment at 4%, with X buzzing about weather rebounds and fed layoffs (DOGE’d or not). Challenger’s 172K layoffs—highest since ’09—scream recession, but weekly claims yawned. Challenger job cuts this high tend to correlate with recessions, will this time be different?
What’s the French word for “Stagflation”
Our friends across the pond at the ECB cut 25bps as expected, citing slower growth estimates and uncertainty. What is the economic term when you have negative growth and rising inflation - Comment dit-on stagflation? Anyway, -0.9% GDP growth with 2.3% inflation forecast for 2025…spells “baisses de taux” I guess.
In case you were wondering, they will remain “data dependent”. Nothing beats a “meaningfully less restrictive” policy stance while revising up your 2025 inflation forecast to 2.3% - whatever, long and variable lags, expectations, pick your catch phrase.
Don’t worry, Fed Governor Waller is in no mood to cut rates at the upcoming Fed meeting. He could still see two cuts later this year, but he’s data and the “t” word dependent.
With central bankers seemingly clueless, perhaps we need wisdom from one of the world’s greatest investors.
Ooh, a storm is threatening My very life today If I don't get some shelter Ooh yeah, I'm gonna fade away
While markets puke, the legendary Howard Marks dropped his latest memo, Gimme Credit, presumably a pun on the Rolling Stones hit Gimme Shelter. For Marks, credit’s your shelter when equities’ P/Es are drunk at current levels.
A big takeaway from the memo is that current expected returns on credit are much better than what the expected return from equities has historically been when P/E’s are at current levels. Marks also rebukes the concerns over spreads being historically narrow, saying: “The bottom line for me – as I tell anyone who asks – is that you can’t eat spread, or spend spread, or pay pension benefits with spread. For those things, you need returns. Spreads have to be assessed to ensure they’ll be adequate to offset credit losses, but in the end, it’s the total return that matters.” Despite Marks speaking to the benefits of credit and private credit, he doesn’t dismiss the risk inherent in the rapidly growing private credit market. For me, Marks is one of the best minds in thinking about risk and asset allocations. In this memo, he references two of his recent memos, On Bubble Watch and Ruminating on Asset Allocation, which you can read my commentary about here and here respectively.
I gave up tariffs for Lent - so only econ data on the look ahead
I’ve written ‘tariff’ 100x this year—so for Lent, I’m giving it up. This Friday, we’ll just focus on Jobs data and whatever the man in the Orange Hat says (aka J-Pow, aka the Orange Powell Ranger)
We go into this Jobs Friday with S&P down at 5,720 - those darn globalists. The 2Y yield at 3.97% and the 10Y yield at 4.29%, where will things end if data is a bad miss vs. a big beat?
XTOD: Challenger Gray report: U.S.-based employers announced 172,017 job cuts in February, the highest total for the month since 2009 and the highest monthly total since July 2020 when 262,649 cuts were announced
XTOD: Tuesday: Trump slaps 25% tariffs on Mexico and Canada
Wednesday: Trump exempts the auto industry
Thursday am: Trump exempts most Mexican imports
Thursday pm: Trump exempts most Canadian imports (though he still insults Canadian PM)
Meanwhile... Trump says more tariffs coming April 2.
This kind of whiplash is damaging to the economy. How can anyone plan? Or even understand what the real goal is here?
XTOD: The stock market is down but at least everything is more expensive and services are getting shittier. On the other hand we have more measles. To be fair, they are finally delivering the reductions in FAA and National Parks staff that people have been demanding.
XTOD: Let's call it how it is in terms of a scorecard. Since inauguration, SPX is down 4% and China FXI up 24%. Worse, the most prominent stocks i.e. "market generals": $NVDA down 22% and $BABA up 71%. Perhaps someone should explain to the President why (Masa Son, Tepper, Cook? )
XTOD: What you push down doesn’t vanish. It festers and wields quiet power over your thoughts and actions. What needs to be addressed that isn’t currently being addressed?
https://x.com/NickTimiraos/status/1897633379824136347
https://x.com/byHeatherLong/status/1897745796432642417
https://x.com/brianschatz/status/1897715279805006096
https://x.com/NewsLambert/status/1897703602291949821
https://x.com/JamesClear/status/1897754488309702704
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