The Super Bowl Of Economic Data
Equities start the day lower after the Super bowl of economic data, the jobs report, showed a better than expected monthly gain. Boom! 295k jobs in February, cue the marching band and tri colored buntings! (I’ve always wanted to use bunting in a recap, if I didn’t hate baseball so much it would’ve been easier). Here’s a fun little tidbit I found on Twitter this morning: In the last year the economy added an average of 272k jobs per month. Not much lower than the 280k per month we had in 2000. You know what that means right? BUBBBBBLEEEE. Nasdaq 5000 and 280k jobs per month? If I saw a sock puppet on TV trying to sell me kitty litter I’d be buying bank CDs and stacks of 20 dollar bills. Actually it doesn’t mean bubble, it means the US is still growing at the same steady pace it has been for years. So why were stocks lower at the open? Why did futures do this? I’ll give you three guesses and the first two don’t count. Because the big bad Fed might actually run out of excuses not to tighten! Everyone’s favorite “good news is bad news” trade! Yay!! Anyway, my guess is the Fed probably does something with their Forward guidance at the next meeting but that’s down the road. Let’s see how today played out first (I don’t necessarily hate baseball, it’s just the most boring thing on the planet to watch. Especially without beer. Honestly is it watchable at all without beer? Where was I going with this)
After the open the market threw a full blown tantrum over the fact that yes, the Fed might actually have to raise rates one day. I mean is that crazy or what? Who expected that? Not me I tell you. Down 1.25% over the first half of the session but the REAL move was in rates. We talked about that “lowflation trade” unwind on Wednesday and you have to wonder how many people are offsides in fixed income right now.Look at this one day move in 10yr yields! That’s heady stuff for a market where people were screaming to buy 1.8%! Fixed income feels like trapped longs to me…in a big way. So let’s keep this short and sweet on a Friday. The market sold off because the end of insanely cheap money might come sometime this year. And then we will go from insanely cheap money to just normal cheap money. WAAAHHHH. Hey market, do you want some French cries with that? Seriously, even with a rate hike we are going to have crazy low interest rates for a while right? Not many winners out there: SCHW, ETFC, CMA, and some banks. Losers were plentiful and included NEM, FOSL, PPL, SCG, and PHM. By lunch we sat on 2,072 down 1.3%.
The rest of the day was more down and to the right. We closed near the lows, 2,071 on a fairly miserable day that I thought started out pretty good. We’ve seen this gong show before though, we’ve seen these knee jerk reactions to “potential Fed action”. The market is just going to have to figure it out because rate hikes will be coming one day, we weren’t going to sit at 0 forever. So let it spit and fight and get red in the face because you are getting discounts on Disney and any other of your favorite stocks. Just have a plan, stick to it, let the market figure all this out. Oh and check one of my news highlights for stock returns around rate moves…it’s not all bad.
Final Score: Dow -142bps, S&P500 -142bps, Nasdaq -111bps, Rus2k -136bps.
- Succinct Summation of the Day’s Events: A bunch of people found jobs, brightening their economic future, so everyone decided to sell stocks because interest rates might rise 0.25% in a few months.
- Speaking of rate hikes, here are what stock returns look like around one.
- Read everything that Baupost puts out. Including this: “That’s why it is of paramount importance to do everything humanly possible in a bull market to prepare for the next bear market: Improve processes and procedures. Train up your team. Stick to your knitting. Avoid portfolio leverage. Maintain sell discipline. Develop a loyal and supportive clientele. Match your funds’ liquidity terms with the liquidity of the underlying investments as best as possible. Hold some cash in reserve to take advantage of future opportunity.”
- Daniel Loeb doesn’t sound like he’s buying the energy dip yet: “All of the funds that have been set up to capitalize on distress in the oil patch might be disappointed, kind of like European funds that were set up to capitalize on European distressed-debt situations,” Loeb said Friday in a conference call discussing results at Third Point Reinsurance Ltd., the Bermuda-based reinsurer that he co-founded
- FDX stock down today because their new delivery service is experiencing growing pains
- This is just gross.
- How is this even possible?
- Escaping the “new normal”! The inversion of the reasons which formed the conditions for the “New Normal” are the predicates for achieving escape velocity out of it. These predicates have become satisfied just as the growth trajectory has busted higher. This points to saying “Goodbye!” to the “New Normal”, and welcoming in a new regime.
- Ride the world’s tallest and fastest gigacoaster!!
We’ll end tonight with a different kind of fail compilation, Russian dash cam videos! And it’s even set to one of my favorite songs…bonus.
Have a good night.