And I don’t mean Hazel…
Although Hazel and her grotesque grin are back as well, as August payrolls knocked it out of the park on the back of non-productive Leisure/Hospitality services, Government and Education/Health services.
However, Manufacturing was also positive and I would not discount the prospect that it could be due to production of more killing machines within the Fabricated Metal Products sub-segment of Manufacturing, which includes Ordinance & Accessories.
Awesome; America great again.
The net result today (Friday) is a knee jerk to the Yield Curve flattening/Goldilocks view, which we went into detail about last week after Warsh book-ended bond market expectations on the short end to go with Bessent’s bond market manipulation plan on the long end.
While it is possible that the whole thing will blow up in their faces, the favored view is that they will manage to engineer…
…some form of Goldilocks into the economy for a short phase. If next week’s inflation numbers come in “just right”, we could have ignition. A phase up to or through Bessent’s stated bond-buying time objective of November 4th. A phase right up to the mid-term elections. Must be a coincidence. <sarcasm>
Here I want to be careful not to go tin foil hat on you by suggesting that Government hiring and possible defense (sorry, offense) spending within Manufacturing may have been purposeful. Seriously, we need to play this straight in order to avoid emotion in making investment decisions.
If… and in my view it’s still an ‘if’, the Yield Curve flattens under pressure of short-term yields continuing to firm relative to long-term yields, and if the result is a positive market response in some areas, those areas are probably big Tech and after its recent beat-down, Semiconductors.
Areas that could struggle would include the “inflation trades”, silver leadership within precious metals and some, not all, commodities (strategic and critical minerals from copper to uranium to rare earth will have discrete inputs aside from a blanket “inflation trade”).
I am certainly not rushing to take profits in precious metals holdings, but I am not increasing positioning in the near-term until I get the macro sussed out. Using the 2013-2016 Op/Twist-instigated Goldilocks as a blueprint and NFTRH’s leadership chain of SOX > NDX > SPX, which was born back then, I want to view the current macro as a potential mini version to that extended Bernanke-rigged phase.
I already hold some big Tech and have started to reestablish a foothold in Semiconductors. Some Software stocks have been under pressure lately, and that would fit the profile of a Goldilocks sector as well.
But we shall see. Let’s watch the process unfold. At this time, we are looking to the mid-terms. Along the way or after November 3rd it will be time to reevaluate and/or refine the view.
For “best of breed” top-down macro analysis and market strategy covering Precious Metals, Commodities, Stocks and much more, subscribe to NFTRH Premium, which includes a comprehensive weekly market report, detailed NFTRH+ updates and chart/trade setup ideas, and Daily Market Notes. Receive actionable (free) public content at NFTRH.com and subscribe to our free Substack.
