Market On Open, Friday 10 January
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Los Angeles
To our many readers and subscribers in the LA area - I hope you are at least keeping safe amongst the devastation. Unimaginable situation. My thoughts are with you.
Now No-One Knows If Good News Is Bad News Or Good News Is Good News
by Alex King, CEO, Cestrian Capital Research, Inc
When the Fed was in its rate-hike cycle from early 2022 through to 2023, good news in the labor economy was most certainly bad news for the capital economy.
Then, when the Fed was poised to start the cutting cycle, because inflation was all beaten down, good news for labor was also good news for capital, because if more money was available to labor then labor would spend more of it on things owned by capital, and if that more money wasn’t inflation-money then the Bad Man At The Fed would not hike rates in order to spoil capital’s lunch that day. Yippee!
Now, it seems that inflation may not, in fact, be beaten. Look at what the bond market is saying, and look at the oil price. So, muses capital, perhaps this good news thing isn’t so good after all. Maybes, says capital, we want labor to have less money because then the Bad Man will worry that labor needs more money and then might cut rates some more whereupon yay, more lunch for us!
But, some people are saying that the Bad Man isn’t looking at the right numbers, and that actually whilst there are more jobs for labor, some of those ….people who work … what are they called again? … poor people, that’s right …. some of them are apparently working more than one job and are still …. not able to buy a place in the Hamptons. Hm. So maybe bad news for labor is bad news for capital, because if the poors can’t, you know, pay off all the capital that capital loaned to them then … oh, very bad. No catered lunch at the office anymore!!!!
It is, in short, a rather unsettled time in markets right now. At such times it is preferable in my view to sit back, preserve capital, hedge a little here and there, place small wagers perhaps, sleep in a little longer, not get so amped up. Today we have NFP at 0830 Eastern - I would expect an crazy reaction from markets every which way till Monday, and then perhaps a direction sets in .
Let’s see where everything stands before the NFP mind virus hits.
Short- And Medium-Term Market Analysis
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