By Alex Moschina, Total Wealth Research, 2024-08-10
Recession?
What recession?
After the week started with historic drops…
Kicked off by weaker-than-expected jobs numbers that suggested the economy might be cooling a little too fast…
The talking heads were back to throwing around that nine-letter word that strikes fear into the hearts of investors.
Goldman Sachs warned that the risk of a downturn was growing. Others followed suit, including America's largest bank, JPMorgan.
A torrent of headlines ensued…
It was a cold splash of water after months of whispers that the Fed may actually pull off the mythical “soft landing” it promised.
Fear was back in a big way.
Then on Thursday… things turned around.
The cure for bad labor numbers, it turns out, was not-so-bad labor numbers.
Weekly jobless claims came in lower than expected. Meaning that even though July was a rough month for the American worker… things may not be so bad after all.
(We know what you're thinking, and no, investors cannot sue the Bureau of Labor Statistics for giving everyone whiplash.)
The S&P jumped more than 2% on Thursday in response to the news.
As Robert predicted in his piece on Tuesday, the CBOE Volatility Index (VIX) returned to a more palatable level after Monday's massive spike.
It's sitting around 24.37 as I write, right on the edge of normalcy and nervousness. It's down 60% from the peak on Monday, which represented – in Robert‘s words – “a full-blown market panic.”
Tech stocks, as I mentioned on Wednesday, were hit especially hard.
That's why Shah followed Robert‘s piece with a look at support levels for each member of the Magnificent Seven in a special edition of Buy This, Not That.
“[There] are some underpinnings of support and hope,” Shah explained. Strong earnings and an all-but-assured September rate cut should ultimately bolster these megacaps.
Things were already looking much better as we closed the week.
As of Friday morning, every Mag 7 stock was up from where it started on Monday.
Bad Week
Of course, there's no way to know exactly what next week will bring.
Could July CPI numbers – set to release on Wednesday – cause another mini-panic?
Absolutely.
We could also see evidence that inflation is looking well under control, raising the chance of a 25 or even a 50 basis point rate cut in September.
But the fact is… it's Saturday. Markets are blissfully closed. And we've all got better things to do than speculate about what the coming week will bring.
In the words of the Buddhist monk Bodhidharma, “To seek is to suffer.”
“To seek nothing,” he concluded, “is bliss.”
Or, as the O'Jays once sang…
“For the next two days, I'm livin' for the weekend.”
Enjoy it.
We'll be back on Monday with Shah‘s Takeaways.
The post The Cure for Bad Jobs Numbers appeared first on Total Wealth Research.
