Has The Market Changed?
Investors,
I was interviewed earlier this week and gave my thoughts on a wide range of topics, covering my Bitcoin target, current market outlook, and big-picture macro themes.
Scroll down to watch that interview, or click here, but I want to give some additional context about market conditions based on the events that took place during the 2nd half of the week…
The economy is growing at a pace of +2.7% YoY.
The unemployment rate is holding constant at 4.1%.
ADP Private Payrolls are showing job creation of +233k.
The pace of inflation on a YoY basis continues to decelerate.
Consumer confidence is surging and making new multi-month highs.
S&P 500 corporate earnings are showing strong beat rates for EPS & revenue.
And yet, stocks (and Bitcoin) struggled this week, particularly in the 2nd half.
Yes, job creation in the official nonfarm payroll data from the BLS was a significant disappointment, only creating +12,000 jobs in the month of October (vs. estimates of +110,000); however, this is likely due to extreme weather conditions.
While August & September results were revised lower by a cumulative -112,000 jobs, it’s vital to contextualize what actually happened after these revisions…
Despite being revised lower by a total of -112k, total job growth in August & September was +301,000 new jobs, for an average of +150.5k/month.
There’s nothing recessionary about +150k jobs being created per month.
As such, I want to reserve judgement on the October results and broader labor market conditions until the November data comes out next month.
Was this a one-off caused by hurricanes in the Southeast?
Or was this an official shift in the labor market towards outright weakness?
It’s too early to call it, but I currently lean towards the former.
By exercising patience, I refuse to jump to the conclusions of the people who have been wrong about the labor market for 24+ months. These “analysts” have predicted that the labor market is set to implode for more than 2 years, to no avail, during a period where I’ve reiterated that the labor market is resilient & dynamic.
Personally, my view is that it’s still resilient and dynamic (as shown by a solid 4.1% unemployment rate and average earnings growth of +4.0% YoY).
The conditions for my bullishness over the past 18 months have been very simple:
Resilient labor market
Resilient consumer
Resilient macro
Modest softening in all three categories
Persistent disinflation
Rising corporate earnings
Disinflationary (or non-recessionary) rate cuts
The trend of higher highs & higher lows for risk assets
From my vantage point, these conditions haven’t materially changed.
Based on the data and a holistic approach to investing, I reiterate my broad-based bullishness, while accepting that the stock market can experience -5% to -10% pullbacks within this bull market. Those types of pullbacks, historically, are normal and healthy during sustained market uptrends.
End of story.
So far, the S&P 500 is “only” down -2.5% from its recent all-time high on October 17th.
This is normal.
This is healthy.
This is constructive.
I would not be surprised if the market falls a bit more; however, I am not reducing stock market exposure or Bitcoin exposure and I will simply aim to allocate more capital into the market in the event that the dip continues.
Factually, short-term dips within long-term uptrends are a good place to buy more.
The stock market is quite literally at all-time highs, which means that all dips that have ever happened in the market have been buying opportunities and paid off for investors with a long-term horizon.
Please, if you’re struggling during this market environment, you have two choices:
Take a step back, reassess, and clear your mind.
Make sure you’re getting access to the best research you possibly can, which means signing up for the premium version of Cubic Analytics.
I’ve been right about this market, in both directions, for the majority of the past 4 years that I’ve been publicly sharing my research. There will be a time where I’m wrong, briefly, before I shift with the trends and acknowledge that conditions are changing. Regardless of what the market does, I will be on the right side and lay out my view for the market on different timeframes.
If you want unbiased, objective, & accurate analysis, you’re in the right place.
Without further ado, please enjoy my latest interview on the Thinking Crypto podcast.
Please go subscribe to Tony’s channel, like the interview, and tell him I sent you!
Best,
Caleb Franzen,
Founder of Cubic Analytics
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This report expresses the views of the author as of the date it was published, and are subject to change without notice. The author believes that the information, data, and charts contained within this report are accurate, but cannot guarantee the accuracy of such information.
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Great stuff as always, my friend.