Financial News vs. Noise
That was a tough one. Weaker than expected jobs number, downward revisions, Fed heads not committing to 50bps, worries about a hard landing, you name it.
Jobs Slowdown Frustrates Investors Who Wanted Certainty on the Fed-WSJ
But beneath the surface there were more worrying signs. June’s jobs growth was revised down by 61,000 to 118,000, and July’s by 25,000 to 89,000 jobs. These revisions make it difficult to take August’s apparent rebound at face value. They also come on top of a very significant downward revision announced last month, by 818,000, of the total number of jobs added in the 12 months through March 2024. All together, these data points suggest a steadily weakening jobs market.
Short term we could be in for some tough sledding. I talked about this on Friday that we are in a period where it is going to be tough to make money. We sell off, then we bounce, then we sell off. The moment you start getting some traction on either the long or the short side you get a day like Friday that pulls the rug out. For now keep your position sizes smaller and have some hedges. Intermediate term it's hard to fight the Fed.....
The question now is 25 or 50? Probably more importantly is the Fed behind the curve? I think they are
The stock market is stumbling because investors suspect a Fed mistake-MarketWatch
From Jefferies....
We are changing our call for the Fed to 25bp each at the September, Novemberand the December meeting. We are still not in the 50bp camp at any of themeetings unless data materially deteriorates. Our base case remains one of asoft landing and the unemployment rates peaking around 4.8/4.9% in the currentbusiness cycle. In our view, the Fed will deliver a 25bp cut in September, butthe tone would be on the dovish side and indicate that it is prepared to easemore (and at a greater pace) if the data materially deteriorates.
Here's a key point from Mike O'Rourke....
While the S&P 500 remains in denial of the slowing, lower revisions of earnings estimates have commenced. Even after recent downward revisions, earnings are still forecast to grow 15% in this slowing environment. That will be a near impossible feat.
SPY now looks like a short.
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There is support around 535.
QQQ still looks like a short.
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The 200 day moving average is support.
If last week wasn't fun enough, this week we get CPI and PPI. The following week is the FOMC. Interestingly, nobody seems to be talking much about the inflation numbers anymore, we've moved on from worrying about inflation to worrying about recession. Probably for good reason, but, if we do see a tick up in inflation then we could start to worry about stagflation. Not predicting that, but think anything is on the table.
This is something I have talked about. I think at the end of the day AAPL could be the big winner in AI once it's on all of our phones.
Apple Needs Time to Be on Its Side for AI iPhones-WSJ
Hence, there are high hopes the new phones can spark some new action—especially since they will be the first to incorporate Apple’s new artificial-intelligence technology. Apple’s stock price has surged around 25% over the past six months, well outperforming its megacap tech peers in that time. The stock closed Wednesday about 6% below its record high from July but still fetches nearly 31 times forward earnings—18% above its five-year average and a 48% premium to the S&P 500’s multiple, according to FactSet data.
I don't think so, but you certainly want to broaden out to the other aspects of AI.....
Nvidia Stock Rises. But Citi Says the Chip Maker’s Dominance Could Be Ending.-Barron's
“Our sense is that Nvidia is becoming just another large-cap growth stock,” a team led by U.S. equity strategist Scott Chronert wrote. “A simple look at the deceleration in rate of forward guidance increases suggests that its most profound performance and fundamental impacts on index price action may be behind it.”
I continue to think you should start to focus on the power it is going to require to make AI work, and digital biology.
One of the other major investable themes out there is the weight loss drugs. This stat should excite you as an investors, and terrify you as an American.....
Who Can Use the New Obesity Drugs? Nearly Half of Adults Under 65 Are Eligible.-Barron's
More than 40% of U.S. adults with private insurance have conditions that would make them eligible for the GLP-1 medicines from Eli Lilly LLY -1.10% and Novo Nordisk NVO 0.19%, according to the healthcare policy group KFF.
This is interesting. On Friday I talked about how I believe trading is just like poker.
Why This Wall Street Firm Wants Its Traders to Play Poker-WSJ
Young traders who join the trading giant Susquehanna International spend at least 100 hours playing cards during a 10-week training program. When the stock market closes at 4 p.m., they often head straight from the trading floor to a dedicated poker room at the firm’s headquarters in the Philadelphia suburbs.
When Chasing More Dividends Leaves You With Less-WSJ
High-yield equity funds are popular, but the pursuit of a large payout can sink your portfolio
A few things to keep in mind when it comes to dividend funds:
- Whether you get money from dividends, interest, or capital gains, it's all the same (yes can be slightly different tax treatment)
- There are times when it makes sense to try to earn money from each
- Buying a stock just because it has a high dividend is usually not a wise strategy
- Buying a stock for other reasons, that also happens to pay a dividend, is often much wiser
