December 2, 2022
Good morning,
From Wednesday’s MN: “Except for the true dreamers, few expect Jerome Powell to lighten his hawkish posture.” Well, let the Dreamer’s dream because JP did slightly soften his position from a month ago, and we know it took markets by surprise because the market reaction seemed much greater than the degree of change from the Fed Chair. On the day, the S&P 500 Index and the tech-heavy NASDAQ Composite Index were up +3.12% and +4.42%. Impressive. Our rally continues.
The heavily anticipated November employment data came out this morning, and unfortunately for bulls, the data was a little hot. The headline Nov. Payrolls increased +263k vs. an expected +200k. The wage data beneath the headline number was even hotter and Futures dropped -1.5% immediately upon the data release. The market’s dovish narrative has been upended and market prices have been marched back about halfway into Wednesday’s gains.
The market has 6 trading days ahead of it to digest today’s jobs disappointment and prepare for next important inflation puzzle piece, the November CPI number. I doubt one jobs number will turn back the current rally. It may cause it to pause a little, but the rally appears to have enough momentum to continue on into year-end.
Hope you have a nice weekend.
Be well,
Mike