The market exhibited enough spunk yesterday to hold above key technical levels. The Heat Map shows major hits in Consumer Staples (XLP).

Heat Map

It was a very interesting session for Consumer Staples, which is now being talked down as Americans turn to miracle pills.

I do not buy the hype. However, there is less demand for food as households scrimp and save to get through food insecurity.

Commodity Dive

U.S. Commodities are taking it on the chin, especially copper. The experts keep saying, ‘No recession.’ It's hard not to believe the economy is slowing more rapidly. The action in precious metals is also disconnected from the Wall Street and Federal Reserve narrative.

Market Breadth

The market breadth was evenly divided, and volume was extremely light.

But only four names on the New York Stock Exchange (NYSE) and nine on the NASDAQ Composite closed at a new high. Astonishing.

Market Breadth	NYSE	NASDAQ
Advancers	1,274	2,032
Decliners	1,561	2,074
New Highs	4	9
New Lows	67	95
Up Volume	1.76 billion	1.79 billion
Down Volume	1.74 billion	2.33 billion

The NASDAQ 100 Cracks in Armor

This was the juggernaut of 2023, but now it is harder to resist the unyielding spike in the 10-year bond yield.

It’s all about the jobs report this morning…buckle up.

Portfolio Approach

There is no change to the sector weights in the Hotline Model Portfolio.

Today’s Session

The jobs report is out, and it is not a “strong” report as will be widely expressed in the media.  The headline number came in better than expected, but here’s the reality.

• 1/3 government jobs (why so many and where does the money come from to pay these people?)
• 1/3 leisure and hospitality– the lowest paying jobs
• 1/3 healthcare, which is a lot of underpaid nurses caring for an aging population

Headlines move algorithms and their moves trigger actions in human beings.  Here’s the initial reaction.

The headline number should be 263,000 since 73,000 were government.

Sadly, we must look at the jobs report through the lens of the Federal Reserve.  With that in mind, there are three pluses (I hesitate to use the word positives):

• Wages m/m +0.2% consensus +0.3%
• Wages y/y +4.2% consensus +4.3%
• U3 Unemployment rate 3.8% consensus 3.7%

Powell & Co will not be happy that only 90,000 came back to the labor force.

Bond yields spike with the ten-year hitting 4.887%. 

On balance, I think the Fed got a lot of what it wanted. So did the stock market in the sense people are consuming because they have jobs, even folks that are leaning heavy on credit cards, and that bodes well for earnings.

Let’s see if we retest the pre-open lows.  That is the set up for today’s session.

Comments

Only with my uncanny ability to observes the obvious Charles, the money comes from us. Don Lauro on 10/6/2023 2:29:49 PM

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