– The light ahead illuminated the the road
– The questions asked had but one answer
– Decisions made had a determined price
– Answers came easier as the hours, days, and weeks pass
– Plans made in response
Produced planned results
– As if
…Was littered with the debris of mayhem. Equities proved strong, for the most part last week, after riding a volatility that extended deeply into all financial markets. Currency markets, debt markets, commodity markets all felt it. The driver was macro-generated, at home and abroad. Europe feels the inflationary heat. The Bank of England increased their Official Bank Rate for the second consecutive policy meeting, as the substantial minority, four of nine, dissented in favor of a larger rate hike. The European Central Bank entertained the thoughts of tapering their asset purchase program at some point, perhaps later this year. The rapidly rising U.S. dollar finally caught a break relative to its reserve currency peers.
This put crude oil on the hot seat. WTI Crude futures might be trading around $91 as Sunday night and Monday morning collide, and that’s almost off a percent and a half. Oh boy. A barrel of WTI found support just above $87 on Thursday, and hit resistance close to $93 on Friday, as the dollar valuations exacerbated a global view of OPEC+ that is more one of questionable capacity than it is of a willingness to produce.
As the week dragged on, both the ISM Manufacturing and ISM Non-Manufacturing Index results gave cause to doubt economic activity. Both surveys painted a picture of still expansionary conditions, but decelerating expansion at that, on still elevated prices. This leads us to jobs week.
Jobs & Policy
As the week that was wound toward its conclusion, the ADP Employment report for January showed seasonally adjusted private sector job creation/destruction at a -301K position. Countless professional economists lowered expectations for Friday. The While House even warned publicly that January could be ugly. We all knew that the surveys, in this case the Establishment survey had been conducted the week of January 12th, which would place it right smack dab in the middle of the post-holiday Omicron crush that had suppressed and warped results across the realm of macroeconomic data-points as the first quarter of the year got underway.
To the surprise of nearly everyone, the BLS put a print of +467K seasonally adjusted January jobs to the tape, more than 200K positions higher than the highest estimate that I had seen. The bond market reacted immediately. Then stocks went for the most part green… …….