r/stockmarket
I don't understand why the market dropped so much after Friday's jobs report. Despite the headline results, NFP was clearly not that hot
Market overreacted to NFP data; job growth was low-quality (part-time), yet rate hike odds surged, ignoring weak underlying labor fundamentals.
- Market mispriced the quality of job growth, ignoring that gains were driven by part-time roles while full-time employment declined.
- Surge in Fed rate hike odds (40% to 70%) based on flawed headline data increases recession risk and pressure on equity valuations.
- Persistent inflationary pressures from high oil prices combined with potential policy tightening create a hostile macro environment.
So the leading theory for why the stock market fell so much last Friday was because a hot jobs report led to a substantial increase in Fed rate hike odds. NFP reported 172K job additions vs 80K expected.
However, it barely takes any digging to see that all of the job gains came from part time jobs: Part time jobs were up 230K while full time jobs were actually down 80K. Any random person can tell it's not a healthy job market, never mind sophisticated traders with all the information in the world available to them.
Yet, the market treated the NFP results as though they were a massive beat. Federal rate hike odds for the year increased from 40% to 70% once NFP released. I don't understand the reaction. I know there are other factors that are concerning such as high oil/inflation, but a strong jobs market really doesn't seem like one of them.
How did sophisticated stock and bond traders come to the conclusion that the jobs market is flourishing and that as a result, rate hikes are imminent?
everyone knows the economy is shit. were betting on the government putting money into ai. the only thing we can rely on for trump is mass corruption and misuse of funds. were just predicting how he will misuse those funds.
It was profit taking.
yes he is the market mover.
Don’t forget about the deal with Dell. There will be more when we find out what else he put government money behind
It’s because I bought a lump sum
Market is volatile. Don't overthink it. Little things lead to big swings in times of high volatility. People are nervous about an AI bubble, inflation, oil prices, war, government debt, and interest rates.
What data is out there projects this upcoming CPI to be blazing hot. Now do yourself a favor and bring up in parallel the TNX and USO. You'll notice they have moved very much in lockstep during most of the crisis. Over the past two trading days, yields have spiked hard in spite languishing oil prices. It's the first clear sign the bond market is pricing something in beyond the current price of oil.
Now here's the bit a lot of people are missing. Warsh is expected to eliminate guidance at this upcoming FOMC. The bond market is not likely to take this well.
Now we need to add on some other factors: other yields are currently soaring. Yen yields are at highs not seen since the 90s. The ECB is expected to raise rates by 25 basis points on June 11th. FINRA margin investor debt to M2 money supply is at its highest since 2007. In fact, it has only twice been in this range since the turn of the century, and you probably can guess those two occurrences: our last two historic crashes.
What you are witnessing is liquidity drying up at a time when rates are soaring everywhere and inflation is going completely out of control. In fact, one underreported correlation to April's rally was a huge influx of liquidity into the system as banking regulations were relaxed. But we burnt through that in record speed. And now the market needs to find room to take in three trillion dollar+ IPOs at possibly the worst possible moment.
Much of this was already known. It's not that institutions saw one jobs report and were like, welp that's it. It was a good run. See you in a decade. It's just we're past earnings season and all the big catalysts driving prices up, we're past the point really anyone buys the Strait of Hormuz is opening any time soon, and we're heading into multiple potential negative catalysts. Now one final bit, and I posted this in another thread and it made a few people angry, but I'm going to bring it up again: yes the selling started early on Friday in relation to the jobs report, but the TNX went flat for the day fairly early and oil was plunging. However, the selling resumed around 11:00 when news broke the SpaceX IPO is massively over-subscribed.
Sorry for how long this was. Not written with AI. I've just been tracking all of this to try to determine my own best time to go back on the defensive.
Just wait til Wednesday. It’ll get worse. No way CPI isn’t running hot
Plus gas and oil reserves are starting to run dry, and ethanol dilution can’t make up the difference.
Side note: be careful about your fuel now, I work for a major trucking company and we just caught a bunch of gas stations adulterating both their gas, diesel, and even DEF.
Just had about $1M in trucks totaled last week from gas stations diluting fuel of all types with ethanol above the legal limit, and watering down DEF.
The numbers are all made up and revised later.
Market shit the bed bc a couple of chip stocks took a major hit and that segment is about 30% of the SPX right now. Nothingvto do with job numbers or anything else.
The reason is Market Manipulation.
It was the 10 year rising above 4.5% that did it.
If the long end of the yield curve rises, the Fed wil be forced to raise to match it.
Make no mistake, the bond market controls interest rates and the Fed follows.
Because of the implication on rates
Learn macro relationships or perish
Sorry buddy. This was talking about by investors all week last week, everyone SOLD, accept you it seems. Don't troll me please. thanks.