Investors were initially disappointed with the ADP employment numbers–markets seemed to want numbers showing us heading toward a recession. The numbers came in at 155,000 new jobs, exceeding the forecast of 120,000. So good news was bad news and equities (futures) dropped by over 1/2%. Folks apparently want softer jobs numbers to entice the Fed to lower rates.
But 2 minutes after the markets opened there was a change of heart and the 1/2% loss has turned into a 1/2% gain. Who knows where things will head this afternoon–and tomorrow.
Interest rates ticked a little higher (5 basis points) on the stronger jobs numbers, but still at 4.21%.
Honestly, I am going to do nothing — I like more clarity, but whether we see that anytime soon is anyone’s guess. I ended March right on target again (3 months in a row) with gains of 1/2%–nothing to write home about, but until I can reposition in some perpetuals (when the time is right–at least in my mind) I am going to have to be satisfied with the 6% annualized run rate.
You know the whole “good news is bad news” just further demonstrates that the market is a liquidity/inflation proxy far more than a measure of real economic activity. When the market goes down it is due to less liquidity and when it goes up it is because there is more liquidity. We should completely stop trying to infer anything else.
Participants closing trades to pay taxes is draining liquidity past few weeks.
Regarding today it doesn’t bode well markets moving higher into the tariff announcement.
30 yr treasuries futures up 1.72% and most risk assets and commodities way down. Market saying tariffs deflationary not inflationary.
Trump said I am bigger than the S&P 500.