Another good market day on the news. Think the market has gotten out over its skis a bit, this was actually a trap I posted about a while back. Lowering inflation was going to give the markets a false sense of security when the underlying cause could be a slowing economy, which will hurt stocks short term when it comes to pass. And the more we tick up the bigger that fall will be.
China really reopening is also a factor. They will increase demand for energy which will raise the global prices and be a factor with inflation. Unlikely the Ukraine situation changes much. Those two issues will have the biggest effects. There are many jobs still open and tech is layoff but will those people go get get tech jobs or be forced into lower wage jobs? Also people who have had student loans on hold will need to start paying them again. I’m sure many didn’t stop(if they were smart). Lots of variables to contend with in the coming months
The falling is over. We’ll do a lot of starts and stops but history suggests a 10-15% market return o; the back of 22’. I do think the nazzy is a little rich as it’s jumped on the prospects of a stop in rate hikes. It’s not likely we get an actual cut until 2024. A soft landing is the most likely outcome at this point.
We will see. Here’s an article that talks about the almost record dispersion in predictions among experts. The numbers used in this article show we are already above the average final price for the year. The median from Moody’s says we are less than 2 percent from the number already. But there are definitely bullish predictions there too. 2023 Wall Street Forecasts For The S&P 500: Huge Dispersion The issue is that we are in completely uncharted waters given the pandemic, the great resignation, savings rates, inflation, the almost record interest rate rise, government spending where it was etc. I would day my opinion is just that, anyone who is right will be lucky more than prescient, when even the people who get paid big money to know have wildly different opinions.
FYI Falling Mortgage Rates Bring Some Home Buyers Back to Market Jerome Powell may actually be achieving a "soft landing" i.e. disinflation with no recession.
Joe runs an economy with lots of jobs.... everyone in Wall Street panics because the Fed is run by nuts and will keep raising rates until people have no jobs and are destitute. January Jobs Report: Pace of U.S. Hiring Surges Unexpectedly The American labor market unleashed a burst of hiring in January, producing another wave of robust job growth even as interest rates continue to rise. Employers added 517,000 jobs on a seasonally adjusted basis, the Labor Department said on Friday, an increase from 260,000 in December. The unemployment rate was 3.4 percent, the lowest since 1969. Even as hiring surged, wage growth slowed slightly to 0.3 percent compared with December.
I mean - it's easy to roll our eyes at the fed pounding us for this good news, but it's not all good news. It's obviously great that theres such a demand for labor and it's great news for those 517K people and their families, but setting aside the inflationary impact of continued wage increase - it's clear we have a labor problem.
And there is a solution. It's increasing legal immigration. Unfortunately nativism including limiting immigration has become a core value of one of the two major political parties. This was from 2020. Trump Cuts Legal Immigrants By Half And He’s Not Done Yet
It’s a good one to have. Labor participation was also up along with the blowout #. The initial market reaction was a sharp sell off but we’ve reversed all that in spite of weak reports from big tech last night. The market likes the macro story being set up for 2023.
Good point. As an employer we are still running more open jobs than we want. However it is much better than the industry shedding jobs which isnt the answer, the answer is more workers and immigration will have to address it.
That number will get rounded down. But if I had to guess on “why the surge”… It’s hiring managers assuming al their open positions are going to be pulled as a cost cutting measure and racing to fill them before they do.
I think the markets will calm down about this because the wage growth slowed a bit despite the massive amount of new jobs added. So the Fed really has no path to argue that this is a sign of massive inflation because people's wages didn't go up at a fast rate, just a lot more of them are working than previously were.