This post originally appeared on April 4, 2023
Apologies – this post was written on April 4. I just realized today that I hit the “save draft” button instead of publishing. As a result, the post is late and out of order. DKI regrets the error.
I’m normally a big fan of Barron’s. Their analysis is excellent and well-considered. I’m also proud of having been published there twice.
However, today’s market analysis was a bit silly. The S&P 500 was down .58% today and the NASDAQ was down .52%. Barron’s blamed the decrease on a “sharp decline in jobs openings”. Today’s jobs report showed available jobs declined to 9.9MM which was below the 10.5MM expected, but we’re a bit skeptical on the analysis.
First, just under 10 million jobs available is a huge number on an absolute basis and millions above the pre-Covid levels. It’s also big compared to the number of people seeking work, and large enough that there is still significant turnover from people switching jobs to make more money.
Second, for the past year we’ve seen the market constantly trade up on bad economic news and down on good economic news. The reason for this is bad economic data means we’re closer to the hoped-for Fed “pivot” to lower interest rates (or at least a pause on raising them). Now, all of a sudden, the market is down on bad news?
Fed Chairman, Jerome Powell, has been clear he’s willing to put the US in a recession to get inflation under control, and every economist and market analyst I’ve read either expects a recession soon or thinks one has already started. The Fed pause/pivot was always going to come with a weaker economy.
This looks like no one could figure out why the market was down today and someone had to make up a reason. To an extent, I’m sympathetic. One of the things I love about running Deep Knowledge Investing is I have time to think deeply before writing. Sometimes, I think, read, evaluate, and write late. Some posts go up well after midnight. If you’re writing for Barron’s, you have a column to fill and it’s on a deadline. It’s hard to be right every day and operate on a short time-frame.
One other thing of note is gold is now very close to its all-time high. DKI recommended gold in 2021 as an inflation hedge. The position has produced profits while the stock market and bond markets are down. We have not sold any of that position.
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