In his podcast addressing the markets today, Louis Navellier offered the following commentary.
If you wish to listen to this commentary, please click here.
The Labor Department announced that 263,000 payroll jobs were created in September, which was below August’s 315,000 and July’s 537,000 payroll jobs. Despite fewer payroll jobs being created, the unemployment rate declined to 3.5% in September from 3.7% in August.
Q2 2022 hedge fund letters, conferences and more
The primary reason for the unemployment declining was that the labor force shrank as the labor force participation rate declined to 62.3% in September, down from 62.4% in August.
Average hourly earnings rose 0.3% by 10 cents to $32.46 per hour in September and have risen 5% in the past 12 months. The September payroll report showed that wages are not keeping up with inflation and fewer jobs are being created, which is consistent with a soft economic landing.
The Labor Department on Thursday announced that new unemployment claims rose to 219,000 in the latest week, up from a revised 190,000 in the previous week. Continuing unemployment claims rose to 1.361 million, up from a revised 1.376 million in the previous week.
Undeterred Fed
The 4-week moving averages of weekly and continuing unemployment claims are still declining, so the Fed will not be deterred from hiking key interest rates by the unemployment situation.
The big thing that's going on is Treasury yields are rising again today. A lot of people think that the Fed is doing the wrong thing because other central banks are stepping in and doing quantitative easing and controlling bond yields. But our Fed is not doing that. The hope that Wall Street had for the Fed to slow down and stop raising rates is over.
Buy Energy Stocks
In the meantime, inflation is resurging. And the biggest surge of inflation is in the energy patch. Fortunately, investors that bought a lot of energy stocks are doing good today. The Dow is down sharply today because the Dow has no energy stocks. As long as you have the energy stocks, you're doing good.
Focus On Earnings
Earnings are working. This market is going to be really simple. Either you have earnings or you don't. And energy stocks will have the best earnings for the next two quarters.
Oil prices are rising this week. Why? Because the Biden administration cannot keep pumping the Strategic Petroleum Reserve (SPR) much longer. The primary reason that the prices at the pump moderated in recent months is that the Biden Administration was purposely manipulating crude oil prices by releasing reserves from the SPR.
I am sure that after the midterm elections, the Biden Administration will have to start refilling the SPR since it is now at the lowest level in approximately four decades.
Further, OPEC+ on Wednesday announced up to a 2 million barrel per day production cut. However, the real production cut may be more like 900,000 barrels per day after factoring in Russia’s production declines and some smaller OPEC members.
The bottom line is OPEC+ wanted to “shock” energy markets to get crude oil prices per day up to $100 per barrel. As always, Saudi Arabia can implement the biggest production cuts and its output will likely determine the ultimate crude oil production cut.
Coffee Beans
A "Tetris" machine built by Spanish company MadLab is the world's largest arcade machine – measuring 6 feet and 5.99 inches wide and 3 feet and 7.82 inches deep. The giant Tetris machine is now housed at MadLab's storefront at the La Torre Outlet shopping center in Zaragoza and can be played for the price of about $5 per play. Source: UPI. See the full story here.
