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If You're Not First, You're Last

Happy Market Update!



Have I complained about vehicles lately? Can I just say, I really don't like depreciating assets. I like how during the last few years, the powers that be were trying to tell us our vehicles were appreciating. I'm sorry, I don't have a Bentley in primo condition from 1930. It's a GMC Yukon. And to be honest, you don't see how I take my turns. Less than 10 mph? Yes, I'm probably yelling at the guy in front of me turning right to get up on with it. I will turn just slow enough to not tip the truck over. Hell, if I could find a ramp, I'd drive like this.


So it probably comes as no surprise that my tires needed to be replaced this past weekend. Perfect. I love spending lots of money right after Christmas. But everything works out in the end, right? I did get some alone time with Jackson. I’ll call this a win. Like a good High D, OCD personality, I get to the store 25 minutes before they open. Why? I do not know. It’s not like I can get in…but Jackson and I did eat some bagel sandwiches while we waited. About 7 mins before they opened, another car pulled up…and another one. And my stress level went up. I see. So it shall be a dash to the door 1 min before 8am. I’m fast…I can leave the kid behind…and I am built like a linebacker, and I will use it.



But alas, they both walked up to the door with 5 mins to go, and can you believe it? Someone let them in. At 7:55. So it’s to be chaos, I see. Two can play this. So I got out, gently grabbed Jackson (he’s incredibly light when I drag him with me) and walked straight into that tire place at 7:57am. We are not following the rules! “It will be anarchy” as Bender says in The Breakfast Club. I walked in prepared to fight, and the first tire guy grabs me and says, you’ve been waiting. Let’s get you in first.


Any you thought this would be about Jackson. Hey, I’ve got problems too…not just him. And he did great. We were there for over 3 hours because, as you all know, they found more problems once the wheel was off. I expected it. But he colored, read short sentences, and did addition and subtraction. Yeah, he got restless at times, but overall, he was more patient than a recession believer waiting for the Fed to cut rates.

 

Speaking of patience, Fed watchers, and markets…we have quietly had a bunch of events over the course of the past couple of weeks. We did chat a bit about the Santa Claus Rally. News: It did not come to fruition this year. Remember, the last 5 trading days of the previous year, and the first two of this year make up the Rally. I see a lot of charts, because that’s my jam. But I thought this one might interest you:

 

Santa Calus Rally – A lot of people think this is Dec. It’s not. By definition, this is the last 5 trading days of the year, and the first two trading days of the next year. Here are the past Santa Claus Rallies that did not work out. There are some pretty rough ones out there. 1999 is moving into the tech bubble, while the 2007 one is moving into the housing bubble. Those hurt. But after January, it’s not all bad…always. So we shall see what this year ends up. Officially, the S&P500 was down 0.9% in that time period.


Here’s a look at more years. So there is some argument for the bulls. Hey, if not this year, then we should be heading down to a bottom for a long bull run, right? Maybe.


Now that the year is closed out, let’s take a look at the bank failures. It seemed to quiet down as the year went on. It’s not the number of closures that is the big deal, in my opinion. Check this chart out from @zerohedge on X. The numbers from the 3 banks in 2023 rials the worst of the Great Recession. Wow. That is nuts.


We also got jobs last week. This first chart is about the three month average of private sector (so not government jobs). That’s lower than the drop from Covid. Not good. Jobs are showing they are growing. But if I was promising jobs and I “ran the government”, then I might create jobs where I could control to fluff my numbers too. This shows that the Fed is getting what they wanted…and I’m guessing this is a strong reason that while jobs have not gone negative, they could stop early. These are the real jobs. But wait! There’s more.



Where are the jobs? Hospitality and services. So not manufacturing Could construction numbers, so we will see if those last. But the talk of the town has recently been about services keeping us alive. By the way, the rumor mill is suggested we are losing more full time jobs than part time jobs being added. How long before that turns ugly? I don’t want another job or two. Yuck.


See that 50.6 number? That is a moving closer to 50 than away from it. Below 50 is contraction. This is the lowest servicing growth in a long time. We had been hovering at 52 or higher, meaning growth. So yes, it is growing. But if we see this number turn under 50, will we continue to see jobs created in that realm?


We are preparing for earnings season. So companies beating earnings should be good for the econom! But what are forecasts telling us? Here is a quote from Data Trek, shared by TheMarketEar.com:


So we shall see how this works out for the year. But once again protecting us, here is something shared to me by AJ Monte, a former market maker and one of my mentors. Basically, he is showing a chart of the S&P500. It’s monthly, so this goes back years. He has laid it next to a standard psychology taught in schools…well, upper level college classes, anyway. This doesn’t mean he’s right or wrong. It’s just interesting to think about how stocks have moved…and where we might be depending on attitudes. Where do you think we are? He appears to suggest we might be near complacency. Yikes, if that’s true.



10yr: Right now I am watching the red curve. It could be a test of the 4.09 level. Or it could be the cup to a cup and handle (still waiting for the handle to form). Why? A test of resistance that fails would lead to lower rates. If we move back a little and then rest it again (the handle), then that’s bullish…and we can expect the rates to move back up. (Let me go throw up in the corner. I’ll be right back.)


MBS: Moving up (lower rates). We continue to move sideways with a bit of a downtrend, at least for the highs for each candlestick. Let’s hope we get some further relief.


What do we learn here? Tires wear out…and so does an economy that has been hurt by high inflation, supply chain issues, lies from DC…the list goes on. But we can also learn to not assume the worst. That tire guy was kind to me (maybe because I was dragging this 5 year old across a parking lot like luggage moving when you are late for a flight). Or maybe he was one of those guys who just knew what was right. Either way, I was going to be there for hours…so it didn’t matter if I was first, second or third. Naw…it mattered. I win.

 

What doesn’t kill us only makes us stronger.


Tim

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