Welcome to my Weekly Wrap Up, a new feature I’m doing where I’ll analyze what happened in markets over the past week and what I have on my radar for the coming week. Enjoy!
This week brought some interesting data and market activity. Let’s dive into what we saw and what might be ahead.
Job Reports Recap
It started with the JOLTS report on Tuesday, which was expected to come in at around 7.9 million but surprised at 7.4 million job openings. That’s a bit lower than anticipated.
This morning, we got the non-farm payrolls report, showing just 12,000 jobs created.
Notably, 43,000 manufacturing jobs were lost, while 40,000 government jobs were added.
So, who’s creating the jobs? It’s the government, not the broader U.S. economy!
Over the past year, the government has probably hired over a million people, which is outrageous if you ask me.
GDP and PCE Insights
Wednesday’s GDP (Gross Domestic Product) numbers came in at 2.8% for the third quarter — less robust than the expected 3%. It signaled a slight slowdown.
On Thursday, the PCE (Personal Consumption Expenditures) index came in at 2.7%, a tick higher than the expected 2.6%.
This tells us that spending is still outpacing income, a trend to keep an eye on.
These reports gave the market a bit of an upward push but not enough to shift the overall mood.
Market Reaction and Election Prep
By Thursday, traders were stepping back, likely prepping for the upcoming elections and next week’s Fed meeting.
Option spreads in major indices like SPY and QQQ, which are normally around 2-4 cents, widened to 10-15 cents, signaling reduced volume.
In fact, trading volume has been about half of what it typically is.
This suggests many are moving to the sidelines, waiting for clarity post-election and the Fed’s rate announcement.
What’s Next?
Monday and Tuesday are likely to be slow, especially with election day on Tuesday. Historically, market activity is choppy on election day as everyone’s out voting.
By the way, I strongly encourage you to go vote.
Then on Thursday, we’ll see what the Fed has to say.
Will they cut rates? They made a half-point cut in September, but with recent weaker job numbers and disruptions from hurricanes in Florida and North Carolina, what they’ll do on Thursday is really up in the air.
Spending could stay elevated due to hurricane recovery efforts, impacting next week’s economic readings.
Key Events and Data Points
Aside from the election and Fed meeting, keep an eye on the ISM manufacturing index and Michigan consumer sentiment report on Friday.
Crude inventories are out on Wednesday, but beyond that, there’s not much major news.
Strategy Moving Forward
Next week is a time for patience.
Expect choppy, unpredictable markets influenced by election results and the Fed’s decision.
It might be best to sit on the sidelines and reassess on Friday.
If you’re feeling more adventurous, be prepared for market swings, particularly on election night and around the Fed announcement.
Final Thoughts
Sunday brings the end of daylight saving time, making it the longest day of the year with 25 hours. This might also add to what I expect will be a groggy start to next week.
With everything coming up — the elections, Fed meeting, economic data, and time change — it’s a week to watch closely and trade cautiously.
Stay smart and have a good weekend!
— Geof Smith
P.S. One that that’s been consistent — even with election and Fed announcements — has been my Perfect Gold Trade. Click to see how I’ve been playing it.
