Employment Fights Recession – by Justin Vaughn

(Justin Vaughn, Editor, Options Trading Report)

Stocks opened mixed on Monday as traders and investors were perplexed…as hiring has soared, with 517,000 new jobs reported since the first of the year, shoving unemployment to a 57 year low, at 3.49%. That is the lowest level since May 1969, after five months of slowing employment, according to the Labor Department. Treasury Secretary Janet Yellon had strong remarks for recession doomsayers: “You don’t have a recession with employment at a 50 year low.” All the ‘ingredients’ for recession are not here…as employment continues to dispel the economists and Wall Street.

Jerome Powell spoke at length on Tuesday at the Economic Club of Washington D.C., on the culprit…inflation, discussing the disinflationary process and all the ramifications, to bring inflation down to 2%. He specifically spoke of December’s Job’s report and said, “inflation has started to come down with a strong labor market.” He also alluded to wages, stating that they “are coming down”. Stocks reacted very positively for a short time, then the market churned, finishing slightly higher. Stocks were aimlessly drifting on Wednesday, as investors and traders focused ‘intently’ on Powell’s remarks on future directions of inflation and continuing hikes necessary to combat ‘stubborn’ inflation. An interesting observation by Justin Wiggs, managing director of equity trading at Stifel Nicolaus, “The attention span of the market is getting shorter,” said Mr. Wiggs. He added, “It’s frustrating to investors.”

Thursday’s market was sluggish, with stocks up in early trading, then giving away early gains to settle lower, with the Dow Jones Industrial Average giving up 249 points and the tech heavy Nasdaq Composite falling 105 points. Investors were digesting earnings reports, some OK and others not making expected numbers, and massive layoffs by many tech companies. As always, investors worrying about the Federal Reserve’s next moves contributed to a fluttery market. Federal Reserve officials have become more direct when discussing inflation, with board of governors member Christopher J. Waller and New York Fed president John Williams, both recently outspoken with their views regarding taming inflation, stating the 2% target ”might be a long fight” and interest rates “are barely in restrictive territory,” respectively.

Super Bowl…,Super Betting…Super Bowl Fifty Seven will be a super betting event this year, enticing more than 50 million Americans’ wagering a staggering $16 billion far out distancing last year’s $7.6 billion wagered, with a multitude of betting platforms aggressively vying for the ‘betting buck.’ With 36 states and Washington D.C. legalizing sports betting, the climate is ripe to entice gamblers, giving fans everywhere the chance to place their wagers conveniently. TV and radio have been saturated with advertising heavily as the super bowl arrives. Many companies consider this ‘super bowl’ time frame as an excellent time to cultivate new customers into ‘the fold.’ Every imaginable bet is available on a multitude of betting companies, such as Draftkings, FanDuel Group, BetMGM, Barstool. Even Rob Gronkowski, former New England Patriot and Tampa Bay Buccaneer, has been lured out of retirement by FanDuel to attempt a field goal on Super Bowl Sunday!

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Seema Shahchief global strategist at Principal Asset Management, WSJ “For everybody, there is a level of data dependency. It’s telling us what to expect for the coming weeks or months from the central banks. Our focus is still on inflation and the labor market and what that means for the Fed.”

Jim Cullen, Chairman & CEO of Schafer/Cullen, Capital Management, Barron’s “History shows that it doesn’t pay to try to time the stock market, but there are times when risk levels have increased to a point where it is wise to have a safety net–like dividends.”

Lawrence C. Strauss, lead writer, Barron’s, Barron’s “After a really bad year, the real estate sector is bouncing back. Real estate investment trusts, or REITs, gained 10% in January, the best performance since 2019, according to the FTSE Nareit Equity REITs Index.

Randall W. Forsyth, writer of UP & DOWN WALL STREET, Barron’s “The 517,000 boom in nonfarm payrolls was more than two and a half times economists’ consensus forecast. The unemployment rate, derived from a difficult survey of households, fell to 3.4%, a level not seen since the mid-1960s. Digging deeper into the data revealed other robust details beyond the splashy headline numbers.”