March 9, 2025
What You Need to Know Today:
Jobs surprise–economy delivers stronger than expected performance in December
In December U.S. economy in December added the most jobs since March and the unemployment rate unexpectedly fell. Nonfarm payrolls increased 256,000, exceeding all but one forecast in a Bloomberg survey of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November, a Bureau of Labor Statistics report showed Friday. For 2024 as a whole, the economy added 2.2 million jobs—-below the 3 million increase in 2023 but above the 2 million created in 2019. The data almost certainly assured that the Federal Reserve would not cut interest rates at its January 29 meeting. As of 11 a.m. New York time, the yield on the 10-year Treasury had climbed another 5 basis points to 4.74%.
Economy added only 12,000 jobs in October–if we can trust the data
The U.S. economy added 12,000 jobs in October. The unemployment rate, which uses a different survey method, held steady at 4.1%. The Bureau of Labor Statistics revised the August and September reports to take a total of 112,000 jobs off earlier estimates. The average job growth over the past three months is now 104,000, down from 189,000 over the six months before that. The revised data and the October estimate are both more in line, in my opinion, with what is likely to have been happening in the economy as the result of high interest rates from the Federal Reserve. I thought hugh interest rates should have been slowing the economy more than the initial data suggested. And now it it looks like those high rates were working much more in line with past history of the economy. Of course, the big question today is should we believe the October report
Fed mission almost accomplished as PCE inflation dips to 2.1% rate
The Federal Reserve’s preferred measure of U.S. inflation, the Personal Consumption Expenditures (PCE) price index, fell to a 2.1% annual rate in September.
So far, the big issue with big tech earnings is valuation
From BIG Tech earnings results so far, what seems clear is that if a company smashes through expectations like Alphabet (GOOG) did, the stock will climb. If, however, you merely match expectations like Meta Platforms (META) and Microsoft (MSFT) then shares retreat.
Lithium Americas closes $2.3 billion DOE loan–stock climbs and then gives it all back
Yesterday, Lithium Americas (LCA) announced that it had closed a $2.26 billion loan from the U.S. Department of Energy’s Loan Programs Office under the Advanced Technology Vehicles Manufacturing Loan Program. The funding is earmarked for the construction of processing facilities at the Thacker Pass lithium project in Humboldt County, Nevada. Thacker Pass is currently North America’s largest known lithium resource. The stock jumped almost 5% yesterday on the news. It fell 8.87% today to $4.11 a share. Lithium Americas is a member of my Millennial Portfolio.
At 2.8%, GDP growth misses estimates but maintains strong trend for the economy
The U.S. economy grew at a 2.8% annualized rate in the third quarter, the Bureau of Economic Analysis reported today. The growth rate was down slightly from 3.0% in the second quarter. Economists had projected 3.1% growth. GDP has now climbed for 10 straight quarters.
Special Report: 10 Great Growth Stocks that Are Getting Greater–today my 10th (and final) pick QCOM
GREATER Growth Stock Pick #10: Qualcomm (QCOM). I think the market and the current stock price are missing a good prt of the growth story for Qualcomm. Which is why I find the stock undervalued enough to buy here. Right now the market disagrees. However, I’ll be adding the stock to my Jubak Picks and Volatility Portfolios on Tuesday, January 16.
Live Market Report (20 minute delay)
A shutdown of the Federal government is almost certain in the next 8 days
Yeah, you’ve read all the stories about who will get hurt by a government shutdown–folks who need passports, communities in need of disaster aid, childcare centers, air travelers–and I’m sure your full up to your eyeballs with stories about how the Republican majority in in House is so dysfunctional that Speaker Kevin McCarthy couldn’t win a vote to declare water wet. But I’ve got some really good news: because the statisticians who compile the data on GDP, employment trends, producer and consumer prices, and other indicators that track the economy will be furloughed if the government shuts down, we’re not likely to know the full extent of the damage until we’re well into what could be a prolonged shutdown. Of course, it’s not clear that not knowing will be appreciated by financial markets that are already looking a bit anxious.
Bad news for housing; bad news for the economy
In its interest rate policy decisions, the Federal Reserve is trying to figure out how much of past interest rate increases have already worked their way through the economy and how much of a slowdown is still to come. Today’s housing number from the National Association of Realtors doesn’t answer that question, but the data certainly suggests that the slowdown is still slowing down. The number of previously owned homes sold in the United States dropped by 21% percent over the past year
A tough day for tech–Part 2, Bad news from Adobe (and selling Adobe out of my Volatility Portfolio)
Now that Fed day is done and behind us, we return to our regularly scheduled programming. Back on September 15, I posted “A tough day for tech–Part 1” after news on Taiwan Semiconductor Manufacturing (TSM) reporting that the company was slowing orders with suppliers of chip making equipment because of sluggish demand for chips from its customers. Now onto Part 2 of bad news for tech stocks.
No (2023) surprises Fed surprises on 2024
At today’s meeting the Federal Reserve’s Open Market Committee left the central bank’s policy interest rate at 5.25% to 5.50%. In its Dot Plot forecast the Fed signaled one more interest rate hike for 2023. In its forecast the bank said that rates would end 2023 at 5.6%. That’s roughly 25 basis points higher than today. None of this was surprising. The markets were looking for the Fed to stand pat at this meeting. Odds of that according to the CME FedWatch Tool were above 98% heading into the meeting. The market was calling the possibility of one more interest rate incree in 2023 essentially a coin toss. But the Fed did surprise for 2024.
Watch the VIX after today’s Fed meeting
The CBOE Volatility Index, which measures short-term volatility in the Standard & Poor’s 500 stocks, has been stuck below its long-term average of near 17 since the regional bank crisis of March 2023. In recent months, the VIX has had a hard time breaking above 17 with the index spending most of its time down about 15. Today, at 1 p.m. New York time, the VIX was at just 14.01, down 0.71% ahead of the Federal Reserve’s interest rate decision. There’s just no fear in this market. So it will extremely interesting to see if today’s interest rate decision and the release of new Dot Plot forecasts for interest rates, inflation, economic growth, and unemployment today from the Fed has any effect of market complacency.
Special Report: Your 10 best moves for the rest of 2023–Part 1, 10 trends for the rest of 2023
In this Special Report I’m going to start by sorting out the data that the market’s moves will likely depend on for the rest of 2023. That’s today’s post, Part 1 of this Special Report. Then I’ll try to handicap the likelihood that the data will zig or zag. And give you a sense of how far away from the current consensus the actual result might fall. And then finally, I’ll give you 10 moves for the rest of 2023 that are the most likely, in my opinion, to result in profits and that won’t wind up costing you big if the data winds up throwing investors a curve.
What to watch for in Wednesday’s Dot Plot from the Fed
Here’s my cheat sheet of what to watch for in Wednesday’s Dot Plot revision of the Federal Reserve’s forecasts for the rest of 2023 and 2024. The last revisions before this came at the Fed’s June meeting so there’s reason to think that the Fed will have something market-moving to say about how it sees the economy, interest rates, inflation, and unemployment trending over the next year and a half.
Saturday Night Quarterback says, For the week ahead watch…
Watch what the Federal Reserve says on Wednesday not what it does at the interest-rate setting meeting of the Open Market Committee. Everybody, I mean everybody, expects that the Fed will hold its benchmark interest rate steady at the current range of 5.25% to 5.50%. The odds, calculated from prices in the Fed Funds Futures market by the CME FedWatch Tool, stand at 98% that the central bank will do nothing. But this meeting also includes an update of the Fed’s Dot Plot forecast for future interest rates, inflation, unemployment and GDP growth. And those numbers will give investors the best available clue on what the Fed will do at its November meeting and int 2024.
A tough day for tech–Part 1, bad news from chip makers
Taiwan Semiconductor Manufacturing (TSM), the company that makes the chips for everyone from Apple to Nvidia, has told suppliers to delay some deliveries amid concerns about slowing chip demand, according to a new report Friday from Reuters. The company has told large chip-equipment suppliers to delay some deliveries, Reuters reported. The company is “increasingly nervous” about demand from its customers, the report said.Last week, the company said its August revenue fell 13.5% from last year but rose 6.2% from the prior month. As you might imagine, the news wasn’t greeted with cheers by investors in technology stocks.
Will it work? People’s Bank tries to boost growth without tanking the yuan
The People’s Bank of China cut the amount of cash banks must hold in reserve for the second time this year. The move is an effort to boost flagging economic growth in China. The bank could have cut its benchmark interest rate in pursuit of the same goal. But that would have led to more selling against the yuan and the People’s Bank has been busy in the trenches in recent weeks trying to prop up the yuan agains the dollar. The question, of course, is whether the cut in reserve requirements will be enough, without a reduction in interest rates, to revive growth in China’s economy.
European growth will get weaker with latest ECB interest rate increase
The European Central Bank raised its main deposit rate by a quarter of one per cent to 4% today. That’s the highest level in the history of the euro. Economists are suggesting–maybe “hoping” would be a better word–that this will be the last interest rate increase in this cycle for the ECB. The latest increase comes as Euro Zone economies flirt with recession
Moderna shares popped 3.2% yesterday–here’s why
Shares of Moderna (MRNA) closed up 3.18% yesterday, September 13, on news that
1. The Food & Drug Administration has approved updated Covid-19 vaccine boosters (including one from Moderna) and that the Centers for Disease Control was recommending the boosters for adults and children older than 6 months. 2. The company announced that the newest results from Phase 3 clinical trials for an updated version of its flu vaccine, mRNA-1010, had met all primary endpoints in a Phase 3 trial, Compared to Glaxo’s Fluarix, Moderna’s vaccine showed higher antibody levels for all four influenza strains (two each for influenza A and B) recommended by the World Health Organization (WHO) as well as higher seroconversion rates. This comes after an earlier version of the vaccine failed to demonstrate superiority for the B strains. The company expects to meet with regulators very soon and, depending on guidance received, the flu shot could launch as soon as next year, CEO Stephane Bancel told Fierce Biotech. “We’ll know more in a few months when we speak to regulators, but [we’re] trying to go as fast as we can,” he said. Of these two pieces of news I’d say No 2 is way, way more important
Inflation climbs and market yawns
The theory, for today at least, is that the uptick in CPI inflation for August doesn’t change the basis calculus at the Federal Reserve.
CPI looms over market tomorrow
The consensus is that tomorrow’s CPI al-items inflation number will show show a pick-up in inflation pressures. Economists are predicting the biggest monthly jump in 14 months—-and the swap market is pricing in risk that it will come in even higher than expected.
Saturday Night Quarterback (on a Monday) says, For the week ahead expect…
I’m looking for another wild ride for Apple (AAPL) and consequently for the entire tech sector. Apple shares dropped another 3% on Thursday taking the two-day losses in the shares to almost $200 billion, (Yep, with a “B.” That brought Apple’s market cap to $2.9 trillion. Yep, with “T.”) A massive (Internet irony alert) rally on Friday took the shares up 0.35%. And I think that this coming week could be just as volatile.
Sell U.S. Oil Fund to take profits (and raise some cash) after oil rally since June
Tomorrow September 8, I’m selling shares of U.S Oil Fund (USO) out of my Jubak Picks ad Volatility Portfolios to take profits on the 25% really in oil since June and to raise some cash in case September volatility delivers a bargain or two.
Will budget insanity in Congress disrupt current market trends?
Oh, boy, something to look forward to. The Senate returned to session on September 5 and the House will follow on September 12. And a new government shutdown looms. (This is different than the threat of a default on U.S. government debt that was averted by a last-minute deal to raise the debt ceiling. This time the government and agencies such as the Federal Aviation Administration and the Department of Agriculture would simply hang closed signs on their doors until Congress appropirated money for operations.)
The timing has a good likelihod of disrupting a clear trend in the financial markets.
Uh, Oh, investors start to speculate on September 20 Dot Plot from the Fed
U.S. stocks fell today, Wednesday, on a stronger-than-expected, Purchasing Managers Index (PMI) for the service sector. The reading raised fears that the Federal Reserve, which is generally expected to keep interest rates steady at its September 20 meeting, will not move quickly to reduce rates. The odds of an interest rate INCREASE at the Fed’s November 1 meeting rose to 47.2% on the CME FedWatch Tool from 42% yesterday.
China growth weakness sends U.S. (and emerging market) stocks down
Last week I posted a video arguing that, again, U.S. stocks were the only game in town with both the Chinese and European Union economies sputtering. The market action today, September 5, showed, however, that even if the U.S. economy is leading the world with solid if not spectacular growth, U.S. stocks will still feel the pain of bad news from the world’s two other big economies. Today U.S. stock indexes fell on new data from China showing continuing weakness in that economy and indicated that a turnaround is still a way down the road.
Saturday Night Quarterback says, For the week ahead expect…
Next week I expect the battle in the financial markets over whether or not the Federal Reserve will increase interest rates at its NOVEMBER 1 meeting to heat up.
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