00:00 Tim, what do you say?
00:01 Well, we were warned, folks, about potential bowling metaphors and analogies and anyway,
00:07 puns.
00:08 So, anyways, we'll be careful.
00:09 As much as I am concerned about China-Taiwan, that's not what the markets were worried about
00:13 today.
00:14 Markets were worried about a combination of three Fed presidents reiterating Powell's
00:17 message from Friday.
00:19 And how about this JOLT status?
00:20 So for people that don't know what the JOLT status, it's basically job openings.
00:24 The rest of that acronym you can figure out.
00:26 It doesn't really matter.
00:27 What's important is that there's so many more job openings than there are people to fill
00:31 them.
00:32 And as we have a payroll number on Friday and some CPI numbers across Europe and China
00:36 over the next couple of days, that is where the market's anxiety is.
00:39 It's rates that if you looked at a year ago, did you know that the two-year rate was at
00:43 21 basis points?
00:44 It's now at 346 a year later.
00:48 So twos, tens, that spread we like to talk about to at least give you some indication
00:51 of also where the economy is based upon the shape of the yield curve.
00:56 It was 125 or so basis points a year ago.
00:59 It's negative 36 and counting.
01:01 So I think today was all about reiteration of interest rates moving higher.
01:05 Equities don't like that.
01:06 That's been digested all day.
01:08 And as much as I think geopolitics have something to do with this and there's other reasons
01:11 to be concerned, this is what we're concerned about.
01:14 And the JOLT really underscores the notion that inflationary pressures will remain, that
01:17 wage pressures will remain for corporations.
01:20 That is something that the Fed is going to have to even fight maybe harder to tamp down.
01:24 Yeah, so if you listen to most economists or strategists, they'll tell you that the
01:27 stickiest parts of inflation are wage inflation.
01:29 Again, I kind of think that that will kind of correct itself as soon as we have the unemployment
01:33 rate start moving higher.
01:35 And that's the one thing, one piece of the puzzle that really hasn't jived with a lot
01:39 of this negative data that we've seen.
01:40 If you think about the stock market, Mel, you just said that the S&P is down almost
01:44 8% in the last 10 trading days.
01:46 We've had 10, excuse me, four moves of greater than 10% from a relative high in 2022, averaging
01:53 about 13% lower.
01:55 OK, so here we are down about 7.5% or so from those recent highs.
01:59 If you think about all of those things that you say are weighing over the economy, well,
02:03 they're clearly obviously weighing over the stock market here, too.
02:06 And I would just say it's not done yet, even though that we've retraced 50% of the move
02:10 off of the June low.
02:11 I mean, I think if you think of the stock market as a market of stocks, well, the news
02:15 for individual companies is about to get a lot worse.
02:18 It's been incrementally bad all year.
02:20 The stock market has been discounting that data as it's been careening lower.
02:25 We had that rally when people thought the Fed was going to change their tune.
02:28 That's not happening.
02:29 There's really no reason why the S&P 500, if the economic data continues to get worse,
02:33 which is going to cause the company level data, the earnings level to get worse, why
02:37 the S&P shouldn't go back to those June lows.
02:39 We just heard tonight there was a report that Snap is about to lay off 20% of its workforce,
02:43 so even more pain to come.
02:44 And we continue to hear these drips and drabs about layoffs and job losses that haven't
02:51 hit the numbers yet, or we haven't seemed to see them in the numbers yet, Courtney.
02:54 Yeah, and I think we've talked about this previously, but where a lot of those job losses
02:57 are happening are some of your big tech companies, and those are some of the things that are
03:00 selling off the most right now.
03:02 And yes, those started to recover a lot when things were recovering the last two months,
03:05 but we were saying that probably isn't going to last.
03:07 You're seeing now those are starting to get repriced.
03:09 I would continue to proceed with some caution there on some of your larger technology names.
03:12 I do think those are going to be the ones that are feeling the pain as we're starting
03:15 to see inflation is maybe not coming down as fast as people want.
03:18 Those are the things that are going to be likely the most susceptible.
03:21 Guy, Tim pointed out how far we've come in terms of the two-year yield in just, why are
03:27 you laughing?
03:28 0.21%.
03:29 I missed you, Mel.
03:30 I mean, I missed you.
03:33 I missed you all.
03:34 I mean, you've been gone.
03:35 From the bottom of my heart.
03:37 I'm so glad to be back.
03:40 But a lot of, especially in terms of the context for a potential, if you are a bull and you're
03:47 hoping that there's going to be a big move higher in tech or that that is going to be
03:51 the backbone of the market, the rate backdrop in and of itself is completely different this
03:56 time around.
03:57 So if you're hoping for some sort of a revival in some of the lower quality names, I don't
04:02 know, that's going to be hard.
04:04 No, that's exactly right.
04:05 And since you started with bowling, I'll just throw one more bowling metaphor out because
04:09 why not, Mel?
04:12 For the last, you know, it coincides oddly enough.
04:15 You know, when I was a kid, there were no bowling guards in the gutters.
04:18 In other words, if you were lousy, you were throwing it in the gutter because there was
04:21 nothing to stop the ball.
04:23 Then some genius came up with the idea, well, maybe we should democratize bowling and put
04:28 these gutter guards up.
04:29 So everybody thinks they're remarkably Earl Anthony.
04:32 Well, that's what the Fed did too for 15 years.
04:34 But you know what?
04:35 The gutter guards are down, Mel.
04:38 And now everybody's seeing what a miserable bowler they are.
04:41 And I'm actually being half serious.
04:42 I mean, now exactly your backstop's not there.
04:45 So I think you make a great point.
04:46 Two-year yields are going to continue to go higher.
04:48 I think there's a chance that the 10-year yield actually starts to go lower from here
04:52 in a flight to quality.
04:53 But I will say this, so it's not all doom and gloom on this Thursday.
04:58 The HYG didn't get cratered today and the VIX surprisingly closed unchanged.
05:03 And, oh, by the way, today's low is basically a 50 percent retracement of the recent low
05:10 in June and that high we made a few weeks ago north of 4,300.
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