Weekly Market Update – September 7th

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This Week Ahead: What to Expect

Two main things to watch: First, the Beige Book, will give us insight on the Fed’s “unification” on rate policy. In other words, who wants more, who wants less.

Second, Powell will speak on Thursday.  Look for any “pivot” from early hawkish language given last week or does he “double down” on his aggressive stance on policy. 

U.S. Job Market Cooled in August but Remains Solid

Gain of 315,000 jobs was spread broadly across economy.

The tight labor market loosened some as employers hired fewer workers, more people sought wotk and wages rose at a slower pace. the jobless rate ticked up to 3.7%. Still, job growth remained well above the prepandemic trend.

Emerging market bonds are much more dispersed, and fundamentals are arguably better. Key central banks started hiking rates to fight inflation last year. They have nearly finished tightening as the Fed and European Central Bank get started. “Brazil is the “poster child,” increasing rates sevenfold, to 13.75%, since March 2021”, says Alejo Czerwonko, Chief Investment Officer for Americas emerging markets at UBS Global Wealth Management. Latin American rival Mexico has hiked from 4% to 8.5% over the past 14 months.

Many times we spend a lot of time focused on Fed policy, but these two countries remain ahead of the curve.

Past pain with runaway inflation has taught them to act early and act fast.

Labor Force Dropouts Return to Job-Seeking

The share of unemployed job-seekers in the US who weren’t even looking for work the month before rose to a record, according to data published Friday by the Labor Department. The large monthly flow of people who started looking for work in August helps explain why labor-force participation and unemployment both rose in tandem. Whether that continues may depend on the job market staying strong and enticing people back in.


An ugly end to an ugly week...

3 weeks ago-over 60% of all stocks were above the 50 SMA, now down to 32% 

  • Gold has not acted as it should as inflation protection.
  • Is that about to change?   
  • With Bitcoin struggling, the above chart implies we have at least bottomed for now. Russia closing off pipeline has added to demand.
  • A sharp rally in gold can also imply US markets are in for another major selloff, so keep on eye on this chart over the next week.