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Why Are Stocks So Nervous And Is The 'Fed Put' Really Dead?

Apr. 08, 2018 8:24 AM ETSPY, QQQ, VXX, DIA115 Comments
The Heisenberg profile picture
The Heisenberg


  • Ok, it's time to talk about Jerome Powell and the restriking of the storied "Fed put."
  • On the way, I'll address what's going with stocks and why equity volatility isn't spilling over into other asset classes.
  • Finally, I'll give you a snapshot of what to expect from Q1 earnings.

Lost in the fog of war (trade war, that is) on Friday was the March jobs report and a speech from Jerome Powell at The Economic Club of Chicago.

March payrolls left something to be desired, missing badly on the headline. Average hourly earnings were in line with consensus. The big miss on the payrolls print (103K versus consensus of 185K) probably didn't help on a day when sentiment was already souring rapidly amid the tariff headline hockey.

Washington and Beijing traded jabs all day Friday, with China's myriad Party mouthpiece media outlets launching a full court press. Stateside, Steve Mnuchin and Larry Kudlow were dispatched to CNBC and Bloomberg (respectively) to do a bit of damage control following the administration's decision to consider proposing another $100 billion in tariffs against Chinese imports. Notably, China's Commerce Ministry held a press conference at 8 a.m. EST to reiterate the notion that Beijing would not be backing down anytime soon - it is highly unusual for ministries to hold briefings on holidays in China. Friday was a holiday.

The 103K headline on March payrolls marked a notable downshift from February's blockbuster print. You'll recall that in addition to the blistering headline number, the February report also missed estimates on the average hourly earnings front, allaying fears that inflation pressures are building faster than the Fed was anticipating and temporarily silencing critics of late cycle fiscal stimulus who were (and still are) concerned that piling expansionary fiscal policy atop an economy operating at full employment is bound to drive inflation higher sooner or later.

While the March jobs report most assuredly did not paint the same "Goldilocks" picture as the February report, it wasn't bad enough to change the overall narrative in terms of the U.S. economy being on the kind of solid footing that makes it

This article was written by

The Heisenberg profile picture
Perhaps more than any other time in the last six decades, the fate of markets is inextricably intertwined with the ebb and flow of geopolitics. It's become increasingly clear that one simply cannot fully comprehend market movements without a thorough understanding of concurrent political outcomes. Drawing on extensive experience in both politics and finance, Heisenberg will help demystify a world in which investors can no longer hope to conceptualize of markets as existing in anything that even approximates a vacuum.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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