The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Dicey.
Even though the event of the day was the February nonfarm payrolls release (+151k vs +160k est & +125k prior revised from +143k), it didn’t really affect markets. S&P futures were flat just before the data and flat 15 minutes later. The index opened about -12 and rallied to +32 in the first half-hour. The index rolled over and was down 72 points on the day just before noon. The index zoomed back to flat on some confident comments from Chairman Powell and the momentum higher continued, though moderated, in the afternoon. Yields began the day lower and finished the day higher across the curve. December Fed Funds futures now price 71 bips of cutting from the Fed, that’s about 5 bips less than yesterday.
Tariff talk is jostling the market again and the market is battling around the 200-day moving average too (5733). Chart-people and fundamental people are weighing significant developments in their respective worlds, at the same time. It’s resulting in some herky-jerky moves that are getting exaggerated by the momentum players. Frankly, it’s a mess. The only positive from all this is that things haven’t gotten so unbalanced that the S&P zoomed off 2-plus percent in some direction.
Going into the weekend, the bulls get the hip tip for the session, but the bears win the week. Most investors are relieved that the tape is showing signs of life and I’m sure they will come out swinging on Monday morning, assuming innocuous news over the weekend.
The usual questions remain however. Is the US, and global, economy slowing? Is the slowing significant enough to derail risk assets? Are we on an unalterable course?
Today’s labor data, on its face, gives comfort to the longs because it looks like labor is still pretty healthy. The miss was small and the absolute level of hiring is still great from a historical perspective. The 10-year average NFP is +153k. However, DOGE layoffs on en route to the official labor data and private sector layoff announcements have been popping up in the headlines for the last two weeks. The labor data will likely get worse.
How will stocks react when those weak numbers start showing up? Will stocks be shocked or are they currently ready?
I don’t know but I get the feeling that US stocks are living in the moment and not paying close enough attention to the trouble around the corner.
See you Monday, have a great weekend.
-Mike
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