We will be looking for the flashing lights to go on in the school zones next week as it’s back to school (B2S) for many districts next week. But for this morning, I’d like to remind you of something called “The Holiday Effect.”
This being a long weekend, people tend to be happy (for reasons that aren’t quite clear to me). Why the cheerful when Labor Day marks the unofficial end of “summer” and – most places – the onset of colder weather, ice, snow, people traveling too close in the rain on the freeways – you know: The kind of stuff that gives Winter and surrounding months a bad name? They do, my ponders notwithstanding.
Much the same happens with the stock market. We often see unexplainable optimism in the markets right before a major holiday. This one is especially “jittersome” because of the crazy people in North Korea. Not that we don’t have plenty of our own, too…(*as I nervously scan headlines out of DC…)
The Jobs numbers are just out – and as expected – the “Trump Bump” in the data continues with just a chill of fall…
“Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining.
Household Survey Data
In August, the unemployment rate, at 4.4 percent, and the number of unemployed persons, at 7.1 million, were little changed. After declining earlier in the year, the unemployment rate has been either 4.3 or 4.4 percent since April. “
Now we drill down:
Civilian labor force was up 77,000. Labor participation rate (62.9%) unchanged. Total employed down 74,000. Unemployment rate up a 10th.
The CES Birth-Death Model estimated 103,000 jobs into existence and the biggest gains were in Leisure and Professional & Business Services.
When I looked earlier, the Dow futures were set to open up +53 after the data, and if so, the Dow may out-perform the S&P and the NASDAQ. I still like the long side of the market for a while longer, though it may be hours more. Skeptical of happiness, though I am, I will probably plug my nose and try to be 50% long over the holiday but looking to Pyongyang and Moscow (and the Fed data) for tips about next week seems a useful way to spend a cup later this morning.
Vladimir Putin, who will be in China next week for a meeting with what the globalists would just as soon your don’t remember is the ChiCom leadership (how bad can communism be if it makes the rich richer?) says that the NK situation is now on the verge of a larger conflict.
That said, neither Donald Trump, nor the Fools on the Hill has shown any particular interest in backing down, so once we get past the holiday, my “spidey- sense” is eyeing international events for clues about next week.
That may be overthinking the market – and I seem to remember that although Peter Parker (Spiderman, right?) got the girl, Warren Buffett got the money.
So pinched nose looks at our trading model will follow – once around 11 AM Eastern to see how big the Happy Holiday pop will be and again right before the close so I can abuse myself for not doing deeper research on “after Labor Day” market action – which may show up as a Peoplenomics topic this weekend.
In the meantime, there is other news. Like auto sales, for example. Business Insider has a “live” page that might be useful as the day drags on.
Ever notice how time dilates going into a holiday weekend? The period from now until lunchtime is slower than the onset of the Ice Age?
Gas Pumps then Money Pumps
We will (uselessly) wring our hands about gas lines because of Houston oil refineries going off line for only a second or two.
To be sure, there are plenty of gas line stories around, like “Harvey Concerns Spark Dallas Gas Lines.”
But we’re inclined to agree with Texas Railroad Commissioner Ryan Sitton. You see, in Texas, the Railroad Commission (for twisted historical reasons) runs oil and gas. But as Sitton and others who are knowledgeable will explain: If people all go out and buy gas to top off their tanks (panic buying) that will create a problem where there need not be one.
I knew people’s thinking was going off the rails when I overheard two clerks at the local WallyWorld talking when I picked up a few things Thursday. “I went up to Tyler and filled up because I wanted to make it back to Palestine….” Even in the worst gas hog in the world that’s a two gallon trip. But I pay attention to what the clerks are saying – that’s the mainland equivalent of the Caribbean’s “marl road” – not exactly rumor mill; more how people are thinking. It is constantly surprising how much insanity is floating around down at the rumor level of America based on 2-second “headline news” and rumors of shortages.
Magically, people get what they wish for.
The Money Pumps, Then…
Now let’s wring our hands over something we can make some dough on: The Federal Reserve and what they’re doing at the economic money pumps.
If you look at the data (H.6 Money Stocks here), through the last day of June, on a three-month basis, the Fed was goosing the money supply at an 11.4% annualized (increasing) rate. But now, in the sliding window ending August 21 (that was released after the close last night) the rate of increase had been dialed back more recently to a very modest 8.7% annualized.
That will do a couple of things: First, it means there will be less “slop” to feed into the markets. Second, it means we can expect the market to drop this fall since withdrawal from easy money is for the economy, what coming off heroin in jail is like.
The Fed may have a perfect scapegoat, though. Harvey, bad, bad, Harvey will get the blame. And justifiably so: Looking ahead we expect that a lot of insurance and re-insurance outfits will need to start raising cash – oodles and tons of cash – in order to cover the checks which they will have to write to cover insured damages.
The way to raise cash? Sell off assets.
As of this morning, Bitcoins were up to $4,822. They have our permission to head up to the $5,000 area and even a bit beyond. But when they start to come down, it will signify to us that the Consumer Confidence bubble has been pricked (no pricks jokes, please) and that may be as good as any other indicator when it’s time to pop the main and be ready to pop the reserve chute, too. *(We watch the market altimeter closely when it’s getting near the “drop zone.”)
The Federal Reserve’s problem, as we have indelicately explains to Peoplenomics.com subscribers, is that interest rates can’t rise until the Fed get’s off the printing addiction. That’s because there are so many competing sources of “cheap money” that rates can’t rise naturally. I’d point to the 10-year Treasury (data here from Yahoo) as just one example.
When the rates begin to rise is when we should polish off the bull and send it onto the “killing room floor.”
In the meantime, being risk averse, the Fed data does pencil in a tentative answer to our Thursday morning headline “Is this a V up or a wave ii bounce and wave iii down is coming…” No advice, just some friendly paranoia.
Urban Department of Useless
We are back to wondering “Is there something in the coffee at Time?” with them now reporting We Sorted Half a Million Americans Into Harry Potter Houses. Here’s What We Discovered.
Don’t believe governments, lacking real problems to solve, becomes useless? Try this on for size: EU bans inefficient vacuums: The BBC gets cleaning/
The gift that keeping on giving? FREEBIES FOR OBAMA Taxpayers to pick up $1.1M bill for ex-prez expenses/
And in other shocking news: “Drugs found to be more effective against depression than electric current.” NSS.