It was an exciting session, with Communication Services (XLC) stocks leading the charge. Energy (XLE) was the second biggest gainer yesterday, but it had no individual names in the top ten. But there were many in Technology (XLK).

This market's resolve has been remarkable-maybe too good to be true. 

Who Needs an Accommodative Fed?

The rally has ignored the potential for fewer rate cuts, but we need the Fed to be smart.

Fed Chair Jay Powell spoke at Stanford University’s Business School yesterday and tried to walk a thin high-wire. 

He has put so much confidence into three rate cuts this year that the issue of credibility, which never went away, is being raised.

I agree with his contention that the inflation fight is ‘not done,’ but I worry about some of his other comments (I’ll let the charts be the rebuttals).

POWELL: I DO THINK MONETARY POLICY IS WORKING

POWELL: MONETARY POLICY IS TIGHT

POWELL: TOO SOON TO SAY IF RECENT INFLATION DATA MORE THAN A BUMP

POWELL: INFLATION WASN'T STRICTLY FROM DEMAND OVERHEATING

Today’s Session

Yesterday seemed nonchalant, but there was a serious game of risks and reward below the surface, which played out more in the bond market than inequities.

The ADP jobs number came in better than expected and that nudged yields higher.  The first-rate cut seems predicated on an unexpected hit to the labor market, so this news disappointed.

Then the ISM report came in below consensus, but prices paid growth slowed considerably, and the bond market breathed a sigh of relief.

But there was still a fair amount of anxiety that only Jay Powell could ease.

And he did.

Back to rooting for bad news on the jobs front.

Initial Jobless Claims

• Estimate 214,000
• Last week 210,000
• This week 221,00

The number was the highest in two months, which coupled with a new narrative that many immigrants that got jobs in the last two years do not qualify for unemployment insurance, means the actual number is a lot higher.

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