Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!

Buckle Up!! The Time is Here

We’ve been waiting all week–and now the jobs report for September will be known in 15 minutes.

Expectations are for 170,000 new jobs being created while the unemployment rate is forecast to decrease to 3.7% from 3.8%. Ideally I would like to see 150,000 new jobs with a flat unemployment rate–Goldilocks. If I had to guess right now (without all the data I need) the Fed will move rates higher at the next meeting (10/31–11/01) by 1/4%. Overall the economy (and employment) is not moving the way Jay Powell expects it to move–he absolutely wants employment to tumble–regardless of inflation.

It is nice to get crude oil prices tumbling–only 10 days ago we were around $94/barrel and now we are at $82. This is tremendously helpful in regards to consumer confidence and obviously inflation over the longer term.

Interest rates are at 4.74% right now—which didn’t help my accounts yesterday as they took further hits. All I can say is that the blood would be running deep in these accounts if they weren’t so heavily allocated to CDs and treasuries.

I’m starting to plan for a period of buying – legging into all positions–the time is near. I don’t have to do much research as I own many low coupon, high quality issues in small quantity and they have been absolutely pummeled – current yields now between 6.75% and 8%. No need to go searching – I own them already.

Well let’s sit back and watch the ‘show’–this could be a very good day or very bad day (or if we are lucky a very boring day).

27 thoughts on “Buckle Up!! The Time is Here”

  1. This reminds me of the statistician with a bow and quiver of arrows. He was target practicing and carefully aimed at the target and released the arrow. It landed 5 feet to the left of the target. Frustrated, he grabbed another arrow, shot and it fell 5 feet to the right of the target. He threw up his arms with an elated shout and yelled “Bullseye”.

  2. US Data today…

    * Non-farm payrolls ~ up 336K vs 170K
    * 10yr ~ up intraday high 4.881%
    * 20yr ~ up 5.174%
    * XLU ~ utility ETF down 14% last 3 months, $55.33
    * November rate hike expectation…rising, now 34%
    * TLT ~ down again, $84.65
    * PFF preferred ETF ~ down to $28.73, near 52 week low of $28.63

    1. Well at least he doesn’t get to come back next month, move the arrows, then claim success again!!

  3. Americans deserve Christmas. Debts, jobs and goods to be chased, then after Christmas the tax due, layoffs, the paymets due and the utility bills at??
    Seems predictable.
    I was in WalMart yesterday and left a cart of goods at the register and walked out when the manager told me I could not go to a real cashier who had a local job, with local spending, with real tax bills, kids to feed, cars and fuel to support.
    Seems this will not end well for Consumers and Labor as agressive parasitic relationships are now exporting all locally produced capital to Wall Street and bond tranche payments (like mine!). I know these are crappy jobs that may add to a family’s total income, but these workers and lacal families are trying to stay in a system rigged against them and our very neighborhoods. Seems Jim Crow has morphed. Hire more police. I hope to see Civil Disobiedence re-emerge soon. This generation is alot smarter, but seem to not have much gumption…we will see.
    Now we’re supposed to get rid of the EPA, Education Department and have a nice round of Fed driven Austerity? Who’s running this with any wisdom? Trick Question: It’s Aristocratic GREED flat out, both parties are controlled.
    We all hope to stay insulated from any disturbances around us, this is human nature. We want to act smart and think we’re protected, but things are WAAYY out of balance. Good strategies to YOU!

    1. What do you mean not much gumption? There was never mass retail theft like what is going on now. That takes a lot of gumption.
      Hard to say about employment #’s . The baby boomer generation is reaching the top of the bell curve for retirement. I was told not one application received in 4 weeks for my job. One of my customers, and engineer for Pep’e said I would be dealing with a new person come Dec. that is, if they found a qualified person. As a side note he said a contract they landed only had 1/2 the equipment they expected ordered by the customer so they would be only ordering 1/2 the Pb. come Dec.This is on top of him telling me this past Feb. he had ordered everything he needed for this year.
      Had a conversation with a logistics person on a Yay Hoo chat board today who said inventory was starting to pile up at customers warehouses and his company was starting to lay off people. So we may be reaching an inflection point.

  4. I took a 2028 GS 6.375% coupon BBB+ bond yesterday for $99.65 (CUSIP 38150AV36). It is callable 10/24 at 100. Worst case it gets called next October and is like a 1 year 6.6% CD or it goes to 2028 paying me semi-annually at 6 3/8%. These higher grade bonds, treasuries and CDs are nice payers these days – a year ago, who knew?

  5. Note the 170,000 upward revision for prior jobs. Hopefully we can now officially ignore data from ADP?

    The big question this raises is how “long” is higher for longer.? The talk this morning is that the market only expects two rate cuts next year now. That make economic and financial sense but clashes with the Fed’s political sensitivity to the election (as Goolsbee is there to instruct them.)

    1. Historically, ADP and BLS jobs numbers converge over time but in any given month or even over a few months, they can diverge by a lot. Over 1+ year timeframes and after all the revisions, they generally show the same thing.

    2. How about getting rid of the BLS instead. Completely fabricated numbers. ADP would be even more accurate if ADP didn’t try to tweak it to more closely predict BLS’ fictional numbers.

      1. Feel free to ignore BLS but historically their numbers have moved markets for good reason. Clearly, markets don’t think the numbers are fabricated even though they can be subject to significant revisions. Markets generally consider it one of the most data points of the month.

  6. Call me BSC (bat s..t crazy). The playbook for inflation was built by inflation that was caused by excessive demand. Cutting demand (higher unemployment was the way to cut demand). This inflation spike was caused by supply shortages. Maybe it is possible that we can cut inflation without cutting demand. The price this time, is the normalization of the yield curve back to historic norms.

    1. trouble is that normalization is happening by increasing long rates instead of decreasing short rates… there in lies the pain

      1. Agree. These are much closer to the historical averages than the low rates were. I, for one, do not expect them to reverse.

      2. Classic problem, 2wr

        The Fed can control short term rates.

        It has little/no control over long rates other than to intervene by buying/selling. Right now its hands are tied by its commitment to reduce its QE holdings.

        “Mr Market” (otherwise called the bond “vigilantes”) has its own opinion about where inflation is going to go, whether the Fed will succeed or not, and what rates will be in the future.

        Further, there have been warning signs for quite some time about the decreasing liquidity in the Treasury market, with increasing risk of volatility.
        At 8:30 this morning, the yield on 10T jumped 17 bps.

        I expect continued high volatility going forward, understanding all the damage that will cause.

        1. To All and Sundry, watch the $MOVE index as a gauge of bond volatility . . . we’re just getting warmed-up!

        2. They will implement Yield Curve Control to control the long end. There is no way out other than that. They did it in the 1940’s to work off the WWII debt and they will do it again – unless the system blows up before they can.

  7. Intraday rates on the 30 year Treasury edging up to 5% and at 9.01 am going over 5% on some charts. Have not seen a number like that in 16 years.

  8. The US economy added 336,000 jobs in September, significantly more than Wall Street economists expected. The unemployment rate remained at 3.8%.

  9. Wow! Somebody’s crystal ball needs to go back to the shop for repairs! The jobs report was double the estimate for jobs created. …… Mr. Powell likely expelled his morning coffee over his breakfast when he read it.

    1. Growth in wage rates down and more people working, which is good. Next month’s CPI will be lower and once shelter gets updated it will drop even more.

    2. People vastly underestimate the difficulty of knowing how many jobs the $23 trillion US economy created only six days after the end of the month. Companies can’t even tell you how much revenue or profits they produced six days after the end of the quarter. They usually take six weeks to come up with that info.

      It takes 2-3 months to get an accurate jobs count. At inflection points in the economy, it takes even longer.

        1. Or its a politically driven number with no relationship to reality to capture headlines….

          Still got to honor it as the big money reacts to the number.

          1. The reason big money reacts to the number is they don’t think it’s politically driven with no relationship to reality. The way they got to be successful investors is by having a firm grip on economic reality.

Leave a Reply

Your email address will not be published. Required fields are marked *