Howdy folks,
Today’s my last day teaching in Jacksonville with Tom Busby. Tomorrow I’ll be traveling back home for most of the day, which works out well since the market will be closed in observance of the passing of Jimmy Carter.
Today’s market selloff came on the heels of the latest JOLTS report (Job Openings and Labor Turnover Survey), and it’s shining a bright light on what I’ve been warning about for months: the Fed’s mishandling of rate cuts.
The JOLTS data showed more job openings than expected, signaling that the economy isn’t slowing down as much as the Fed wants us to believe. Translation? Inflation is still alive and kicking.
When job openings stay high, it’s a signal that the economy isn’t slowing down like the Fed wants us to believe. And if the economy isn’t cooling, that means inflation is still cooking.
This is exactly why I’ve been railing against the Fed’s rate cuts since at least September. Back then, I wrote about how the Fed’s decision to slash rates by half a point seemed like a desperate attempt to play catch-up, rather than a calculated move to tame inflation.
And let’s not forget what I said just a couple of weeks ago when Powell cut rates again, despite warning that we might not be able to get rate cuts in 2025. It’s clear these decisions aren’t about controlling inflation — they’re political nonsense.
If Powell and the Fed were serious about taming inflation, they wouldn’t have touched rates at all. Instead, they’re giving the market mixed signals, and yesterday’s selloff was a response to that.
Why the Market Sold Off
The market’s reaction to today’s JOLTS report is telling. Here’s why:
- More job openings mean the economy isn’t slowing down.
- If the economy isn’t slowing, inflation isn’t under control.
- And if inflation isn’t under control, those recent rate cuts look like a big mistake.
The market’s basically saying, “We don’t buy it.”
Now, we’re heading into the big number, which comes out Friday: the monthly jobs report. It’ll be the last one under the Biden administration.
I don’t expect much transparency here. The numbers might look good on paper, but the reality is clear: inflation is still intact, and the Fed’s actions so far have only added to the mess.
Now, I’m not expecting miracles here—this is the last jobs report of the current administration, and let’s be honest, we’ve seen some creative accounting in the past.
But whatever the report shows, it’s clear that Trump’s incoming administration will have their hands full cleaning up this mess.
A Messy Road Ahead
The Fed’s decisions over the past few months have set the stage for more volatility. When Trump takes office, he’ll inherit an economy that’s far from stable. I’ve said it before, and I’ll say it again: the Fed should have held firm instead of cutting rates.
For now, my advice is simple:
Keep a close eye on the data. This isn’t the time to make rash decisions. Watch how the market reacts, especially as we head toward Friday.
The market’s selloff was a wake-up call, and the next few days could give us even more clarity on where things are headed.
For now, my advice is simple:
Watch those key levels and stay cautious. The market’s volatility is giving us clues—it’s up to us to use them wisely.
Let’s keep an eye on Friday’s numbers and see how this unfolds.
Talk soon,
Geof Smith
P.S. With fund managers selling their 2024 losers and piling their cash into 2025’s darlings, Nate Tucci is ready to pounce on these flourishing opportunities.
Jack Carter Is All-In on One Key Sector!
