Yo Pit Crazies,
Stocks rally on two things: big earnings growth and job growth.
Job growth means people get paid, they spend, and companies earn more.
That's why we traders care so much about the jobs number.
Inflation is mostly a government problem. Washington misallocates money and prices go up. Growth is the opposite of that.
The federal government has shed about 355,000 jobs since October 2024 (an 11.8 percent cut, per the BLS), and no one, and I mean no one, can tell the difference. That's the same cleaver I'd take to the federal budget.
I've been doing this a long time, and sometimes my biggest problem is forgetting things I already know. Mark had to remind me on the State of the Market show this week.
In the late 1990s, the internet was supposed to put everyone out of business. It did put some companies out of business. The US economy is also about three times bigger in dollar terms than it was in 1999.
The worst predictions didn't come to pass. Keep that in mind as AI event number two, the Anthropic IPO, gets closer. They're just predictions.
VIX Only Cares About One Number
VIX traded under 14 into Friday's close, the lowest print since December. If the Strait of Hormuz is a thing, VIX don't care. If a Fed hike is a thing, VIX don't care.
VIX cared about 162,000 jobs.
Here's how Friday went: The jobs number hit at 8:30 AM, President Trump posted that he'd cut off trade with every country we run a deficit with unless the Fed lowers rates, stocks dropped about half a percent, and VIX dropped with them.
The bond market took it more seriously.
The two-year yield hit its highest level since January 2025, and traders now put the odds of a September hike around 60 percent.
Next Friday, Sep 11th, the inflation number hits at 8:30 AM, five days before the Fed decides on Sep 16th. That's the day VIX could start caring.
It sets up perfectly for my Two Way Trades going in on Sep 9th, ahead of the Sep 11th print.
Right now things look good going into the long Labor Day weekend.
Enjoy it!
Hope this was helpful,
Andrew Giovinazzi