The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Bad labor data
So much for thinking the nonfarm payrolls (-92k vs +55k est & +126k prior revised from +130k) would be an ancillary story. S&P 500 futures were already weak but the bad labor data sent them down much further. Suddenly recession risk comes to the fore and somewhat later, stagflation worries popped up in the market. Treasuries rallied on the labor data, then sold off over the morning, only to rally back in the afternoon. The S&P bottomed shortly after the open, down 119 points. Dip-buyers pushed prices up but never came close to getting the index to flat. We chopped around the down 60 to down 80 point range for most of the day, until dropping again in the final hour. West Texas Intermediate crude prices climbed 12 percent. The morning was a bit scary but even so, capital flow was 113% today, slightly higher but nothing suggesting truly frightened investors.
Even though dip-buyers contained potential nastiness this morning, the chart doesn’t look too good for the bulls. Not that charts determined the future… but still, it influences. Anyway, the situation isn’t purely technical either. The Straits of Hormuz remain closed. The price of crude continues to climb, and it’s applying pressure to other markets. The private credit issue is lurking. And the AI-scare trade is gaining traction again, with AI being labeled as the cause of the nonfarm layoffs last month.
It’s a witches’ brew of trouble out there. That’s for sure. I don’t think sentiment will do a switcheroo just because we have the weekend ahead. I think we need a material positive headline.
The top candidate is tanker traffic resuming through the Straits. I wonder what other kinds of headlines might inspire the longs to push in further and the shorts to quickly cover.
Have a great weekend, see you Monday.
-Mike
Visdom Market Commentary
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