labor market and stock market

By the time you read this, the buzz about what the Fed did and Powell’s presser will be over…at least for the day.

We will not repeat the obvious.

We focus much more on the underlying reasons why, unless the Fed is willing to hike rates above 8%, it will have little impact on the coming commodity super cycle and the uniquely indefinable labor market that is already leading to the Demand for higher wages and employers forced to retain existing staff. In other words, another indication of the ongoing resilience of the labor market and the Fed’s dilemma.

JOLTS: Useless indicator or harbinger of more inflation?

the Survey on vacancies and turnover (JOLTS) program produces data on job vacancies, hiring and terminations.

Here’s the part we find most intriguing and most difficult for the central bank to reconcile. The largest increase in vacancies is found in the service sector – hotels and restaurants. 1.74 million jobs were advertised. Workers in Britain and France are also on strike. They don’t want to work for a 3% pay rise when inflation is at 10%. Then add that many companies are posting huge profits and share buybacks (albeit half what they have been in the past decade).

How far can people be pushed?

What the JOLTS report is telling us is that there is a bigger battle ahead regardless of whether the Fed and ECB are fighting inflation while trying not to plunge economies into recession. Social upheaval, rising food prices, wages that don’t keep up. With JOLTS, corporate layoffs continue. FedEx as the most recent example.

Sounds pretty inflationary, right?

Regardless, we will continue to monitor what our market indicators (Great view) tell us about the breadth of the market. We are particularly interested in the dollar (collapsing) and the performance of gold (received $1950). We are also keeping a close eye on the high yield versus long bond ratio which is now flashing more of a risk off scenario despite the recent rally in indices.

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Mish shares her views on how to approach earnings news from Apple, Amazon and Alphabet, and provides a technical outlook on how earnings results could impact the S&P 500 and Nasdaq 100 in this appearance on CMC Markets.

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• S&P 500 (SPY): Still Looking for December Highs; 410.49 to delete, with target 420
• Russell 2000 (IWM): 190 now support and 202 main resistance.
• Dow (DIA): 343.50 resistance and the high of the 6-month calendar range.
• Nasdaq (QQQ): 300 is now the crucial range.
• Regional Banks (KRE): 64.00 resistance.
• Semiconductor (SMH): I haven’t written “Sister Semi’s on a tear” for a while.
• Transport (IYT): Also strong so these are good signs – December high of 234.74 which should hold.
• Biotechnology (IBB): Multiple timeframes count and this has failed the 23-month MA so far
• Retail (XRT): If you love the modern family, then unless the inverted yield curve starts worrying you anytime soon, they are clearly pointing to happy times. 69 support, 72 swivel.

Misch Schneider

MarketGauge.com

Director of Trade Research and Education