Things You Need to Know
- Did yesterday’s eco data CRUSH the slowdown narrative?
- Today’s PCE is the final hurdle for the FED.
- S&P 7000? “Yes, Virginia, there is a Santa Clause.”
- Feast of the 7 Fishes – #4 Filet of Sole
Well, well, well… look how quickly the eco data can shift from one day to the next. Yesterday’s numbers? Solid. No signs of weakness anywhere in that lineup.
Challenger Job Cuts (y/y): +23% vs. the +48% expected — far tamer.
Initial Jobless Claims: 191k vs. 220k expected — still strong.
Continuing Claims: 1.93M vs. 1.96M expected — steady.
Factory Orders: +0.2%. Durable Goods: +0.5%. Durable Goods ex-Transportation: +0.6%.
Bottom line: Yesterday’s data did not support the slowdown narrative at all. So, what did stocks do? They churned and churned some more ending the day within striking distance of the S&P’s all time high with Big Tech doing the heavy lifting. The Dow –32 pts, S&P +7 pts, Nasdaq +51 pts, Russell +20 pts, Transports +35 pts, Equal Weight S&P +3 pts while the Mag 7 +170 pts.
Now let’s take a look at exactly what the Challenger Job Cuts means because its all about the ‘weakening labor market’ for the FED.
Layoffs are rising — but not exploding. A 23% increase year-over-year sounds big, but the market was braced for nearly double that (+48%). So yes, companies are trimming… but not panicking.
The corporate world is being surgical, not desperate. Most of the cuts are around restructuring, efficiency, tech/AI consolidation, cost management into year-end. This is NOT a broad-based “we’re headed into a recession” – light my hair on fire narrative.
Labor cooling doesn’t mean it is collapsing, Layoffs rising slowly is actually what the Fed wants. They want demand cooled, not crushed — and this report looks exactly like that. That’s interesting, because cutting rates increases demand, not cool it.
The takeaway? This report confirms moderation, not weakness. It says that companies are tightening around the edges, but the labor market (according to this report) remains fundamentally firm. Combine that with the low Initial Jobless Claims data and yesterday’s whole labor picture says that the economy is still stable. No cracks. No emergency. No “hard landing.”
Now today’s data will be the final focus ahead of the FED announcement next Wednesday and it is all about inflation. At 10 am – the PCE inflation data (the FED’s favored gauge) will hit the tape – and the top line it is expected to show m/m increase of 0.3% and y/y gains of 2.8% while Core PCE (ex-food and energy) m/m is expected to be +0.2% and y/y of 2.8%.
These results are in line with the estimates – not better, not worse, but still above the 2% target that the FED continues to tell us is the bogey – something I do not believe, because if it was, then they would have held rates steady after the first 50 bps cut last year, 5 weeks ahead of the election – when they told us that the labor market was circling the drain – something that never happened.
You see the more they cut, the more stimulative it becomes, so the idea that they can get inflation down to 2% while cutting rates is a pipe dream – which supports my argument that they have quietly accepted 3% as the new 2% – Capisce?
In any event – it is what it is…. And the market is still betting on next week’s rate cut of 25 bps.. Now what is interesting is that after Tuesday’s ‘disastrous ADP report’ along with the weak Capacity Utilization – there is a 50 bps rumor running around the rumor mill – Let’s be clear – UNLESS Nicky T writes a ‘breaking story’ in the WSJ or Goldman Sachs issues an URGENT report by Monday morning (or over the weekend) – it ain’t happening.
Remember – at this point they have conditioned us to expect 25 bps – telling us that they have it under control (laughable), so a sudden shift to 50 bps would send a PANIC message to the markets – something nobody wants when there are only 17 trading days until the ball drops in Times Square and 2025 comes to an end. I repeat – they do not want to send a message of desperation next week and ruin the ytd gains in the markets. At this point – IF we are in a desperate situation – it can wait until January.
Bonds fell yesterday – the TLT and the TLH fell by 0.6% and 0.4% and that sent yields a bit higher. The 10-year yield is now 4.10% up 3 bps while the 30-year yield remains steady at 4.76% up 3 bps as well.
Oil continues to trade in a tight range. Yesterday it rose 0.75 cts or 1.3% to end the day at $59.70 – hugging the downward trending 50 dma trendline. This morning it is down 10 cts at $59.60 – remaining in the $57.50 – $59.75 trading range.
Gold –is doing the same…..Churning in a tight range…. This morning it is up $14 at $4,220. Leaving it in the $4075/$4,370 trading range.
Bitcoin is trading at $91,500 while Ethereum is trading at $3,100.
The VIX fell even further yesterday in the ‘complacent zone’ – down 1.9% to end the day at 15.78 and it is now SCREAMING that ‘there is nothing to see here’.
This morning, US futures are pushing higher…. The Dow +40, S&P +13, Nasdaq +95, and the Russell is flat.
European markets are all pushing higher. Germany in the lead up 0.6% while the UK is up +0.1%. The Europeans have already begun to move into the ‘end of year’ quiet mode – asset managers not making any major moves.
The S&P closed at 6,857, up 8 — a new closing high, but not a new intra-day high. For that, we still need to kiss and pierce 6,920 — just 63 points from here… a move of less than 1%.
My sense? The algos are going to force it — just because. And if they push us through 6,920, then you can bet they’ll take a run at 7,000 before year-end.
Why? Because 7,000 is a big, fat, new millennium — a psychologically powerful round number to close out the year on.
And think about the journey: We started the year at 5,868, We traded down to 4,835, And now… we’re about to kiss 7,000 – Amazing.
Call me at 561-931-0190 – to give you a no obligation portfolio review. Let me help you assess the risk of the portfolio vs. the risk you are willing to take.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
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Feast of the 7 Fishes – #4 – Filet of Sole
This is also simple to make and is a personal favorite… For this you need: Filet of Sole, Eggs, Italian Style Breadcrumbs, flour, Olive Oil, and tartar sauce.
Beat 6 eggs in a large bowl to make an egg wash.
Place Flour on a separate plate, place Italian breadcrumbs on a separate plate. Now make a production line. Flour – eggs – breadcrumbs.
Next – dredge in flour – shake off excess then introduce into the egg wash – remove from the egg wash and place it on the plate with the breadcrumbs. Using a fork make sure that you cover the filet in breadcrumbs. Place on a clean plate. Repeat until you have breaded all of the fish.
Next turn the oven to broil and pour olive oil in a pan – maybe like 1/8 inch in pan. Heat the oil under the broiler…. Now be careful and watch – as the oil gets hot you need to make sure that you are ready to broil the filet. Take a pinch of breadcrumbs and toss in the pan…do they sizzle right away? If so – then you are ready.
Now place the filets in the hot oil and then flip to the other side…now let them broil to a nice golden brown…. Open oven door and with a spatula – carefully flip the filets over to brown the other side…
Once browned – remove and place it on a serving platter. Serve this with tartar sauce and any leftovers make great “fish filet sandwiches the next day!” (Make sure you use toasted Italian bread, melt some provolone cheese – add a bit of tartar sauce).
Buon Appetito!