Unexpected Job Losses In Feb, Semis Lead, Banks Lag & Volatility Elevated

Lots of info today. First, my quick glance of the February jobs number shows a loss of 92,000 jobs which almost reverses the unexpected surge shown in January. While these numbers are usually volatile, this is outside the box. My sense is that we will find out that weather played a role. Also, the government uses this “birth/death”  model to estimate corporations. I suspect something in there may be off for January and February. With such job volatility, the best thing to do is to take a step back and average two or three months to smooth things out. I have long speculated that AI and immigration are playing an unusually large role. That will be confirmed if the economy remains reasonably strong. If it rolls over then I am clearly wrong about the employment market.

Semiconductors have remained fairly strong and leading as you can see below. They have pulled back, but they just made an all-time high.

However, banks just hit a three month low which usually causes some concern. They need to find a cushion sooner than later.

The S&P 500 remains in the same range. The longer this goes on the more I think price will need a flush to the downside before finding the bottom from which the market can run to new highs in Q2.

And volatility remains elevated above 20 but not too worrisome above 30, at least not yet. Again, vol may need to spike above 30 to create enough panic to produce the low I am looking for. Spikes are okay. Sustained moves are not. Many of our strategies are more active now because volatility is elevated. Some are more apt to sell some into strength until volatility quiets down.

I love when clients call or email to ask about the smartest financial moves in a given environment. Lately, a number of folks have asked about the best places to add and reduce risk. The most successful investors add risk when it’s dark and reduce risk when it’s bright. As such, I replied that I think the next move to new highs will afford the opportunity to reduce risk for those so inclined. And on the downside, I think below 6500 on the S&P 500 will be a good spot to add overall portfolio risk.

The month of UCONN has arrived. I know some of you absolutely hate that as fans of rival programs. With the kids getting older, my wife has assumed the seat next to me for March and hopefully April when the Final Fours occur. We are doing a quick trip to Marquette for the men’s game tomorrow and then rushing back for a birthday party tomorrow night before heading to Mohegan Sun on Sunday for the women’s Big East tournament. I should probably buy more stock in PG because of the amount of laundry I will need to do this month. It’s also good timing because Ma’ Nature has rained on what was among the greatest two months of Vermont skiing in history. And then spring-like temps are on tap for next week.

On Wednesday we bought CLX, SJM, HRL, more VEOEF and more KMB. We sold SPYQ, TOI, some TQQQ, some MQQQ, some MRNA and some TGT. On Thursday we bought RSP, more RMQHX, more COMB, more MQQQ and more TQQQ.  We sold HYG and some QLD.