Morning Note: Presumed Noble Intentions Notwithstanding

ADP’s jobs number whiffed expectations by a mile this morning, seeing bond yields lower and the gold price higher on the news.

Of course a 330k jobs print vs an estimate of 690k has the market questioning the viability of the whole roaring reopening narrative this morning, but we mustn’t lose sight of the fact that there remain some 9 million job openings and that virtually every employer survey we’ve seen across industry reports of sheer frustration in not being able to entice folks back to work.

Presumed noble intentions notwithstanding, and while, indeed, the Delta variant may represent heightened deterrent for the careful would-be job-seeker, aggressive government intervention can’t help but lead to market distortions; labor market included…

Asian equities rallied overnight, with all but 1 of the 16 markets we track closing higher.

Same for Europe so far this morning, with 18 of the 19 bourses we follow in the green as I type.

U.S. stocks, on the other hand, are in the red to start the day: Dow down 170 points (0.48%), SP500 down 0.30%, SP500 Equal Weight down 0.28%, Nasdaq 100 down 0.25%, Nasdaq Comp down 0.06%, Russell 2000 down 0.03%.

The VIX (SP500 implied volatility) is up 1.27%. VXN (Nasdaq 100 i.v.) is up 2.73%.

Oil futures are down 2.14%, gold’s up 0.07% (losing its earlier luster), silver’s down 0.13%, copper futures are down 0.99% and the ag complex is down 0.27%.

The 10-year treasury has done a complete u-turn since the open, now down notably* (yield up) and the dollar is up 0.18%.

*Newsflash has it that the Fed’s Richard Clarida just stated that “conditions for raising rates could be met by the end of next year”, and that the return to recovery for economic growth would be the fastest in 50 years.” 

Led by ALB (lithium miner), Viacom/CBS, KRBN (carbon credits), TAN (solar stocks) and emerging market equities — but dragged by energy stocks, metals miners, Latin American equities, MP (rare earth miner) and staples stocks — our core portfolio is off 0.18% to start the session.

I would add “or financial bubbles” to the following (on the 2008 “Great Financial Crisis”) from L. Ahamed’s insightful book Lords of Finance:

“Watching the world’s central bankers and finance officials grappling with the current situation—trying one thing after another to restore confidence, throwing everything they can at the problem, coping daily with unexpected and startling shifts in market sentiment—reinforces the lesson that there is no magic bullet or simple formula for dealing with financial panics.”

Ironically, when it comes to dealing with financial bubbles, this far down the rabbit hole, it’s not about how to correct them, it’s, frankly, and alas, about how to keep them afloat.

Have a great day!

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