By Areena Fx- We are only hours away from the end of the 3rd quarter.
- Gov’t is on the verge of a shutdown – each side blaming the other.
- Bonds up, Oil under pressure – the Saudi’s are bringing more oil to market.
- Gold makes another new high – this morning it is breathing just a bit.
- Let the countdowns begin.
- Try the Chicken Tzatziki Meatballs.
Oh boy, oh boy, oh boy, oh boy… and the “amazing-ness” just keeps giving.
Stocks ended slightly higher — but hey, higher is higher — even as the clowns in DC still can’t seem to get their act together.
It’s like watching a three-ring circus: the clowns under the big top keep tripping over their own shoelaces while investors, traders and algo’s meanwhile, shrug it off and keep buying all as if the elephants in the room don’t exist.
By the end of the day – the Dow added 68 pts or 0.2%, the S&P up 17 pts or 0.25%, the Nasdaq was up 107 pts or 0.50%, the Russell ahead by 1 pts, the Transports added 40 pts or 0.25%, the Equal Weight S&P up 24 pts or 0.3% while the Mag 7 added 121 pts or 0.4%.
This all happened even as investors considered the idea that IF we have a gov’t shutdown tonight at 12:01 am (Wednesday) – then we won’t get the KEY labor market data we so long for. Kathy Jones – Chief Fixed Income Strategist at Charlie Schwab said that
“Given the importance of the job market to the fed’s rat cutting decisions, risk that the September unemployment report could be delayed could add to the market’s anxiety over the direction of policy”
Anxiety? What anxiety? They took stocks HIGHER! If the markets were anxious – my gut says stocks should have ended the day lower…. but they didn’t and so it is what it is…..
Given the negative revisions we’ve seen in the jobs data, it raises the stakes for Friday’s NFP report. Recent downward revisions in jobs data, such as the 818,000-job reduction for the April 2023–March 2024 period, have already shaken confidence in the reliability of initial reports from the Bureau of Labor Statistics (BLS).
With the NFP report due this Friday, a headline number below the anticipated 50,000 jobs— which is already far lower than the typical 150,000–200,000 consensus—would continue to signal serious labor market weakness. Investors, traders and ALGO’s are unaccustomed to such a low figure, and would react sharply for this level of disappointment, potentially triggering volatility across markets…. Do the ‘elephants in the room mean anything?’
And it that happens it raises critical questions about the “margin of error” in economic data, amplifying uncertainty about the true state of the labor market. A substantial miss on expectations could lead to “knee-jerk irrational reactions,” (think volatility) with traders once again questioning the BLS’s data integrity while the algo’s send wave after wave of sell orders into the market…. And once that starts – buyers pull out, leaving a void in prices and the next move isn’t pretty. Remember, you take the stairs going up and the elevator going down.
Economic data showed that Pending Home Sales really “blew the roof off the house” — (see what I did there? Pending Sales… Roofs?).
The report came in at +4%, a huge beat versus the +0.4% expectation. That makes sense if you think about it: Pending Home Sales, as reported by the National Association of Realtors (NAR), track signed contracts for existing homes — the resale market — and we already saw that Existing Home Sales beat expectations when they reported on the 25th.
It also lines up with the fact that mortgage rates have eased — from more than 8% last year to about 6.3% now (a 21% decline). Lower rates plus a bit of price softening in some markets means buyers who were sitting on the sidelines are starting to come back in.
And don’t forget — to drive the point home — that New Home Sales “blew the windows out of the house” last week with a 22.9% surge. This report, measures signed contracts for newly built homes — and that jump reflects a mix of builder incentives (rate buy-downs, discounts, freebies/upgrades), new supply coming online, and the usual seasonal tailwinds. In any event – it is not hard to say that the housing market is starting to thaw…..and that’s good news.
Eco data today includes the JOLTS report and — guess what? — it’s full of contradictions.
Job Openings are expected to go higher — 7.2 million vs. 7.18 million.
Now you may say, “slow down, big boy — that’s only 20,000 more jobs,” but the fact remains: the number went up, not down! That’s not what the Fed wants to see if they’re trying to craft the narrative that the labor market is weakening.
But then we’ve got the Job Openings Rate, and that’s expected to tick down to 4.2% from 4.3% — which points to a slightly cooler market.
And finally, there’s the Quits Rate, which is also expected to go lower — another sign that worker confidence is slipping. Remember: people usually quit because they believe they can land a better job — better pay, benefits, location, or culture.
So, a high quits rate signals workers feel confident about prospects. A decline tells you they’re staying put because they’re less sure they can trade up. In the end – do not go making investment decisions based on THIS data point. +
And then we got Stevey Miran — the newest face at the Fed, appointed by none other than Donny. He tried to make the case that Trump’s policies have “significantly” lowered the level of interest rates needed to halt inflation.
Miran even doubled down on his call for a 50-bps cut, warning that the Fed risks damaging the economy if it doesn’t move faster. – But – just to be clear – economists are NOT buying what he is selling. All while St Louis’s Alberto Musalem and Cleveland Beth Hammack – while open to cuts are saying that the FED needs to move carefully – that sound cautious to me.
Bonds rose on the back of all this drama…. the TLT was up 0.8% while the TLH was up 0.6%. 10 yr yields are now 4.13%, while 30 yr yields are 4.70%.
Oil fell by 3.9% or $2.54 to end the day at $63.18….this on the headline that OPEC+ led by the Saudi’s are going to RAISE production….See, this is what I mean, first they say they will because China demand is strong, then they say they won’t because China demand is weakening, then they find out that China has been buying oil from Tehran – behind their backs so they are going to raise production and drive the price of oil down.
Now Iran needs a drop-dead price of $48/barrel to maintain a balanced current account, but they need oil to be $124 to balance their gov’t spending budget – something that is NOT happening anytime soon. The more they pressure oil, the more pain the Ayatollah feels – so boys – go ahead – squeeze hard!
Yesterday’s move sent oil right down thru 2 trendlines and left it sitting atop the third. This morning oil is down another $1 at $62.52 – leaving it within striking distance of the August lows – $61.50.
Gold surged to yet another new closing high up $73 or 2% to end the day at $3833, all this on the idea that the gov’t shutdown is coming. The weaker dollar only fueling the fire. This morning gold is down $12 at $3,820.
It is the final trading day of the qtr. – and US futures are finally taking a breath…Dow futures are down 80 pts, the S&P is down 13, while the Nasdaq is down 57 and the Russell is down 4.
Meanwhile, the government is set to shut down tonight at 12:01 AM unless they strike an 11th-hour deal.
Could they pull it off? Sure. If not — the world won’t implode overnight.
Historically, the threat of a shutdown is usually a non-event for markets……but could this time be different?
Labor market: the softening trend could give this shutdown more bite than usual.
Profit-taking: after the surge we’ve had, will traders and algo’s just hit the SELL button to lock in gains?
Credit ratings: Moody’s, S&P, and Fitch aren’t likely to cut US credit right away — unless the shutdown drags on for weeks. But let’s not get our panties in a bunch. Even if they did, we could see short-term yields pop a bit while longer-term yields ease, as investors demand a premium for holding near-term debt, but still view long-dated Treasuries as the safest, most liquid asset in the world.
European markets are all lower by about 0.35% across the board. PM Starmer is set to address the Labour party delegates at their annual conference – and it is not expected to be pretty. Finance Minister Reeves is expected to announce even more tax increases in her Autumn budget – something not likely to be taken very well.
The S&P closed at 6,661 up 17 points after testing as high as 6677. Futures this morning are pointing to a consolidation day – but much may depend on what happens in DC. My sense is that if there’s going to be an 11th-hour deal, it will literally come in the 11th hour tonight. Either way, the markets won’t really have a chance to react until tomorrow.
Unless we get some kind of meltdown today, September is in the books, 3rd qtr. is over, and we’re officially in the final stretch of 2025.
Here’s your countdown:
14 days until earnings season kicks off.
29 days until the next Fed decision.
55 days until Black Friday — though you can expect “pre-Black Friday” sales to start popping up any day now.
And only 86 days until Christmas — so let the countdown begin.
Chicken tzatziki meatballs
My daughter Amanda gets all the credit for these….and they have become a fan favorite. The combination of fresh herbs, lemon zest and a good dose of garlic makes these meatballs bright and aromatic. And the tzatziki is the perfect cool, creamy complement. We use GF breadcrumbs to help keep them tender and help to hold them together. These are great over rice with plenty of tzatziki for dipping.
For the meatballs
You need: 1 ½ lbs. of ground chicken, 1 red onion, 3 cloves of minced garlic, ¼ c of fresh chopped parsley, 1 tbsp of fresh mint (optional), zest of 1 lemon, 1 tsp oregano, ¾ c of breadcrumbs (or Panko for GF), 1 egg, s&p, olive oil.
For the tzatziki sauce
You need: 1 c of Greek yogurt, ½ of a small seedless English cucumber – grated and squeezed dry, 2 cloves of minced garlic, lemon juice, 1 tbsp of fresh dill- finely chopped, 1 tbsp of olive oil, s&p (Or you can just go out and buy it at the store!).
Grate the cucumber and squeeze out the extra moisture using a kitchen towel. In a bowl, combine all of the ingredients – mix well and place in the fridge until ready to serve.
In a large bowl, combine all of the ingredients for the meatballs – mix well. Next roll into golf ball sized meatballs and place on a plate.
In a large sauté pan – heat up the olive oil – when the oil is hot, add the meatballs, careful not to overcrowd the pan. Cook on all sides, until golden brown – 10 – 12 mins.
When done, serve the warm meatballs with the Tzatziki sauce over white rice along with a Greek salad.