It’s been an extreme week of near bank failures, JOLTS reports and our updated stock collapse chart comparisons so let’ get started.
The Fed raised interest rates by a quarter point to bring us to 5 to 5.25 interest rates. Cash savers are having a field day with 4 percent or higher interest in their bank accounts. The BLS released their JOLTS report and it still shows 9.6 million open jobs.
The number of job openings decreased to 9.6 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations were little changed at 6.1 million and 5.9 million, respectively. Within separations, quits (3.9 million) changed little, while layoffs and discharges (1.8 million) increased. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class.
It is amazing that despite numerous consecutive rate hikes of over 500 basis points that the JOLTS report has barely moved down. Equally puzzling is that the stock market has rallied today despite bank failures, rate hikes and other ominous data.
Let’s take a look at the stock crash comparisons for SPY, QQQ and XHB.
SPY continues its sideways journey and we expect a slow burn down over the next 8 to 12 months.
The QQQ is roaring and acting as an alternative safe haven for investors as Congress flirts with a possible default as early as June 1 but we also expect a slow burn down over the next 8 to 12 months but perhaps not as steep a fall as SPY and XHB.
XHB has been volatile but remains elevated but with the Fed hiking rates to 5.25 and banks becoming capital impaired along with the Fed reducing its balance sheet and draining liquidity as well as commercial real estate having to roll trillions in debt we expect the entire real estate sector to have a challenging 12 months. As a reminder, we hold PUT positions on XHB forJanuary expiry at multiple strikes from $77 all the way down to $55.
Only eight more months to know if we’ll have a profit or loss so stay tuned, stay profitable and stay solvent…