2023/03/09 (187.050) Technical Analysis

Plunge In Financial Stocks
Causes Stock Markets To Sag

US Jobless Claims Rise to 2-Month High
As Companies Cut Most Jobs in February since 2009

The number of Americans filing unemployment benefits jumped by 21,000 from the previous week to 211,000 on the week ending March 4th, the most since December 2022 and well above market expectations of 195,000. The latest value was the first upside surprise in one month, diverging from a series of labor data that underscored a stubbornly tight job market and hinting that labor conditions could start to soften. The four-week moving average, which removes week-to-week volatility, rose by 4,000 to 197,000. On a non-seasonally adjusted basis, claims rose by 35,357 to 237,513 with notable increases in North Carolina (+16,364) and California (+10,489).

US-based employers announced 77.77K job cuts in February of 2023, the most for the month of February since 2009 and compared to 102.943K in January which was the highest reading since September of 2020. Job cuts occurred in all 30 industries, led by technology companies (21,387) and the health care/products space (9,749). So far this year, employers announced plans to cut 180,713 jobs, up 427% from the 34,309 cuts announced in the first two months of 2022 and the highest January-February total since 2009. The tech sector has announced 35% of all job cuts in 2023. “Certainly, employers are paying attention to rate increase plans from the Fed. Many have been planning for a downturn for months, cutting costs elsewhere. If things continue to cool, layoffs are typically the last piece in company cost-cutting strategies,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.

DXY Eases From 3-Month High
While US 10-Year Treasury Note Holds Below 4%

The dollar index fell to 105.4 on Thursday, down from an over 3-month high hit in the previous session after weekly claims unexpectedly rose to their highest since December, easing concerns about a sharp rise in interest rates. Federal Reserve Chair Jerome Powell warned this week that the ultimate level of interest rates could be higher than anticipated in light of strong economic data, and the central bank would be prepared to increase the pace of tightening if needed. Investors are now focused on the February non-farm payrolls report due on Friday, which is expected to show the US economy created 205K, the least since December of 2020, after a 517K growth in January.

The yield on the US 10-year Treasury note bottomed around 4%, remaining marginally below the three-month high of 4.1% touched on March 2nd as investors assessed the pace of future rate hikes by the Federal Reserve. The latest ADP and JOLTs Job figures report showed a still-tight US labor market, underpinning convictions that the Federal Reserve’s monetary policy tightening may be far from over. On the policy side, Fed Chairman Powell stated that recent hot economic data might force the central bank to increase interest rates more aggressively and that the terminal rate may be higher than anticipated. Despite the pullback in 10-year Treasury yields, the remarks drove investors to price an almost 80% chance of a 50bps interest rate hike instead of back-to-back 25bps increases. As a result, the spread between the two and 10-year yields widened to as much as 104 basis points, the deepest inversion since 1981.

Wall Street’s most successful hedge fund just politely told Fed Chair Jay Powell to shut up
And/Or Top economist Mohamed El-Erian blames the Fed for bad messaging and stock volatility

Billionaire Ken Griffin said the setup for a US recession is unfolding, with the Federal Reserve needing to raise interest rates further after Americans were stung with “traumatic” levels of inflation. The founder of Citadel and Citadel Securities said the Fed is limited in how much it can fight inflation with interest-rate increases, likening the tool to “having surgery with a dull knife.”

Economists are unhappy with persistently high inflation and how the Federal Reserve is addressing it. Since the start of 2022, the Fed has hiked interest rates eight times, most recently in February. At that time, the Fed’s chief, Jerome Powell, sounded cautiously optimistic by saying that a “disinflationary process” had started, although there was a long way to go and that smaller hikes could be expected in the coming months. Investors were excited by the news. Fast forward to a month later on Tuesday: Powell signaled that further increases are on the horizon. That news rattled investors, who sent key stock indexes down, as they braced for tighter economic conditions. A leading economist who has repeatedly said the Fed’s goal of reducing inflation to 2% is unrealistic now thinks the central bank’s mixed messaging threatens financial and economic stability. “It really shouldn’t be this way, and it doesn’t need to be,” Mohamed El-Erian, president of Queens’ College at the University of Cambridge, wrote Tuesday in an op-ed for Bloomberg. “Yet once again remarks by Federal Reserve Chair Jerome Powell fueled considerable volatility in markets that could risk both economic well-being and financial stability.” El-Erian’s commentary comes after a Senate panel on Tuesday where Powell indicated that robust economic data including a blowout January jobs report could mean “the ultimate level of interest rates is likely to be higher than previously anticipated.” Investors and market watchers had initially hoped the Fed would begin lowering interest rates by the end of 2023 after a mild quarter basis-point increase during the next Federal Open Market Committee (FOMC) meeting in March. But now, Powell may consider a bigger hike to quell inflation. This expectation was immediately reflected in the markets, according to El-Erian. “Rather than overwhelmingly pricing in an increase of 25 basis points as previously signaled by the Fed, the markets moved the odds in favor of 50 points, which would reverse the downward shift in hikes the central bank prematurely made just a month ago,” he wrote after stocks across the board dipped after Powell’s address. El-Erian thinks the Fed’s confusing messaging has left its leaders with a tough choice. They must either confirm what the market is pricing in by implementing a 50 basis point hike even if that means reneging on the Fed’s forward guidance of smaller rate hikes in February, or follow through with the earlier guidance at the cost of slowing the response to inflation. Either path could hurt the Fed’s reputation, El-Erian added. “The alternative of continuing as is increases the challenges to a global economy facing an important green transition, changing globalization and supply chains, geopolitical uncertainties, and a worsening inequality of income, wealth and opportunity,” El-Erian wrote. The economist has been vocal about the inflation rate remaining “sticky” at 4%, well above the Fed’s target of 2%. The inflation rate in January was 6.4%.

I understand both analysis; and also their criticism of the FED! I’m not saying that their both criticism is wrong!
But it comes too late – and above all it’s addressed to the wrong address! Because the FED only reacts to US inflation.
And is responsible for low US inflation and/or US unemployment. The rest is not your job; let alone is responsible for it. Everyone, please everone, should look at US inflation under Donald J. Trump – and compare since Joe Biden took office. Correct! Since then it has increased at the same time. And there lies the rub. Are we in US politics. Are we already in the running for the White House for a US Republican. Because Kenn Griffin has spoken out in favor of Ron DeSantis as a presidential election candidate. And will the US Republicans choose him or Trump again? One thing is certain; at least for me! We haven’t seen a worse US President than Sleepy Joe when it comes to the US economy, let alone US foreign policy, since I can think for myself (i.e. the early 1980s). That’s why I support every US Republican who wants to go back to the White House in 2024! Whether Trump or DeSantis again? The US Republicans should first – and then the US Americans – decide among themselves! Or? What do you think my readers! Let me know your thoughts, via email Devise2Day@gmail.com, on Trump, DeSantis, the US Inflation, and/or Sillicon Valley stocks that are overpriced…

Technical Analyis 4XSetUp for this week…

Due to the current difficult economic situation in the USA, the currently self-organized US stagflation, the US democrats, under the watch of Sleepy Joe Biden, this “red hangman” not only fits into the technical picture of today. Because the US government is in debt as never before; and the Silicon Valley has never been so expensive, and retrospectively so incompetent; that I too am slowly losing faith in further higher prices, especially on the Nasdaq 100. Not that we misunderstand each other. Of course there are fute services and/or products from Sillicom Valley. No problem. But stocks of listed companies, at current prices, to buy again this week in such an economic environment? And such high interest rates? No thank you! At least not me! Therefore, it is better to put 12-month-long securities in the trading account at the house bank with a secure interest rate of around 5%. And that with 90% of your total portfolio value, so that in 12 months you will have at least 95% more or less of today’s portfolio value! That’s it! My response to the current US stagflation in the US. And the consequence, on US inflation. Which in turn was and is only the economic policy consequence of the green policy of Sleepy Joe Biden. Who, like Cain and his predecessor Trump, takes revenge – and makes the US taxpayers and also US consumers, US Americans, pay for it in the truest sense of the word! The ego of the two is not to be underestimated; as well as the pride of the Americans! That’s why I’m short again on the NASDAQ 100 Index with our short NDX 4XSetUp.

However, us stocks fall ahead of Job Report
The Dow Jones closed 543 points lower on Thursday, while the S&P 500 and the Nasdaq shed 1.8 and 2%, respectively, as investors continued to weigh hawkish remarks by Fed Chair Powell this week while remained concerned ahead of tomorrow’s payroll report. The Fed Chairman stated that signs of a hotter economy from the start of the year warrant faster rate hikes, driving investors to believe a 50bps interest rate hike could be locked in this month should Friday’s jobs report and next week’s CPI print remain heated. The data will follow strong ADP and JOLTs Job figures, although the larger-than-expected increase in jobless claims last week offered some respite from concerns of a stubbornly tight labor market. Banks and financial stocks led the losses, as JPMorgan (-5.4%), Bank of America (-6.1%), and Wells Fargo (6.1%) sank. Meanwhile, SVB Financial’s shares shed 60.4% after the company planned to raise $2 billion to help offset losses on bond sales. By the way, Oracle (ORCL) released earnings per share at 1.22 USD, compared to market expectations of 1.21 USD, after closing bell today. While American Express decreased to a 4-week low of 172.17 while trading session and/or JPMorgan decreased to a 6-week low of 137.43.