Did the market bottom back in mid-June? That’s the question we attempt to answer in the weekly (reach out if you want a copy). I’m not crazy enough to call a bottom, but there’s a fair amount of data to indicate that it could have been one.
But the real objective of this week’s piece is to show that there’s an opportunity cost to waiting for the economic recovery before investing. The market tends to bottom months before the economy, and if that happens again, the risk facing our clients is psychological. They’re going to have to stay in while the economy continues to slow down. That’s not going to be easy.
I’ll be quick today…
This is not a recession
The job market was en fuego in July. Nonfarm payrolls rose 528,000, which crushed consensus expectations of 258,000. In fact, nonfarm payrolls are now higher than they were pre-lockdowns. Unemployment is also back down to the pre-lockdown low of 3.5%, and there are still 1.7 jobs available today for every person looking for one.
The service sector also expanded well beyond consensus expectations. Not surprised at all here, given the continued shift back to spending on services from goods (more money is spent on services during times when stimulus checks aren’t being sent in the mail and people aren’t required to wear masks to walk from the entrance of a restaurant to a table).
But are these good prints for stocks? Strength like this could compel the Fed to keep hiking. Hard to say.
Nate Geraci tweeted this screenshot earlier this week:
It’s mathematically impossible to sympathize with the utter annihilation that’s underway in the NFT market.
Here’s a great meme that pretty much sums up the housing market. But is this happening because the market is softening or sellers are trying to take price? Hard to say, but I’m far more certain that the Fed likes these memes more than we do. They want a housing recession asap because it is the first step in an economic slowdown.
I don’t watch sports all that often, but that could all be changing very soon. Slamball is officially coming back, and words can’t describe my excitement.
Enjoy the weekend…