1. No U.S. Jobs Data
Since there’s a U.S. government shutdown, no jobs data today. Oh no! What are we going to do?!
This is what you need to know: we do know what the trend looks like. Several data sets have confirmed that job market isn’t as hot. ADP data showed decline in jobs, JOLTS report suggest less openings, and Challenger job cuts reported painted a very dire image as well.
Why care about job market? Well, it impacts the consumer sentiment (its been declining), consumer spending (surprisingly resilience for now), the overall economy, and yes it can impact the stock market too.
2. Stocks At All-Time Highs
Stocks continue to trade like nothing is wrong. Its kind of amazing to see, but this isn’t anything new. This movie has played several times over my career.
Valuations according to so many measures are high, but we are told “this time it’s different.”
I just saw 7,000 target on S&P 500 by year-end. This would mean, S&P 500 goes up over 4% in the next few months. Possible? Yes, very possible. Trend is pointing up, momentum is hot, and everything is awesome.
But, this can’t be stressed enough: don’t get too complacent. Trend is your friend, but do know that trends also break sometimes. And, when they do, its never a pretty sight.
3. Commodity Watch
Sell off in gold and silver yesterday was interesting. And, when I say interesting, I mean how people reacted: social media essentially called it top. Just so you know: silver declined like 0.88%, and gold was down 0.33% for the day.
Oil broke $62.00, you were warned about this. Now, there’s a thin support at $60.00, below that $55-$57 could be quick. Mind you: there will likely be a retest of $62.00.
Copper waking up. No surprise really given what happened at FCX’s Grasberg.
4. Bonds
Canadian 5-year is down to 2.71%, and 10-year is at 3.17%.
Canadian bond market is cooling off a little, and this is good news for highly leveraged Canadian consumer. But, remember the big problem remains the debt.
U.S. 10-year hovering around 4.10%. Trend since June is consistently down, but lets see. 4.0% is a big level, if that breaks 3.5% might be the next stop.
Later this month, both Bank of Canada and the Federal Reserve do a rate announcement. If there’s bad data in the next few weeks, these expectations for rate cut can change.
5. Canadian Housing Market…
This morning, we got the good news that home sales in Toronto area increased in the month of September. However, under the headlines, we were also told that prices declined and supply increased.
If you think Canadian housing market is going to see growth like it did in 2021 and 2022, you need to lower your expectations ASAP.
Price declining, supply increasing, and sales increasing is a sign that sellers are giving up on their expectations. Plus, you add the decline in rents, bad economy, higher unemployment rate, higher interest rates, etc., its an uphill war here not a battle.