Wile E. Coyote moments are not upon us; but many traders expected a run at 'cliff-diving'. My view suggested too many stocks already crashed; so there was also too-much-negativity; hence setting up a down-up-reversal on Jobs.

Well, it's possibly even better than we had in mind. How so? 'Softish landing' is the bottom line of getting a blow-out Jobs Numbers with just limited wage pressure. At least limited enough that the Fed can 'rationalize' doing nothing. (Of course there were over a million who left full-time jobs; and more than that took-on part-time jobs or side-hustles; but we won't fret forensic Jobs details.)

If CPI affirms the idea of rate hikes 'done'; then a bottom is likely in process. I should point out the 'Bond Market' is closed Monday (Columbus Day... ok.. it's also Indigenous Peoples Day); so stocks might hold together easier pre-CPI.

By the way I do understand the Fed wanting to put a 'cap' on Housing Prices; but there's been lots of indirect damage; aside the logical move to discourage the rise in home prices; and primarily to lower-income level 'renters' generally challenged for affordability everywhere, not merely traditional major metros.

It's still a 'tale of two markets'; based on the bifurcation talked of all year long. What has gone on has been difficult for investors, including professionals and maybe even more stressful for the leveraged hedge fund crowd and gamblers that pressed the downside 'after' the decline. Now yes, there's a cash-flow or liquidity issue driven by the 'bond crash'; but that ultimately gets ameliorated.

What happened in the last few weeks, besides being our forecast September decline overall, is based on 'Yields'. Pretty good chance we'll stick-around the fairly higher (but historically normal) 4-5% area; and the Fed has to be careful to not let the bond market stay in an adversarial role versus equity markets.

Rates are higher; and might nudge higher; but the drama is behind for rates; if still debatable for stocks this month. But historically October is more-often the start of accumulation during weakness for the year ahead; especially when its had a heavy September. Barring unforeseen events; the Fed's basically done.

If the US can maintain job growth and limited wage pressures, that's positive for the mood and market tone. (Please don't mention the number of workers that took on second or third jobs or side-hustles just to survive higher prices.) I do suspect 'multiple jobs' is part of why the Jobs data was so impressive; at the same time we'll let the market deal with headline numbers not the struggle so many Americans contend with; which the headlines tends to obscure.

Market X-ray: very pleased with Friday; but must remain alert for any sort of developments that could press yields to 5% or beyond. Sure, ideally shouldn't happen; but again we didn't have a full selling climax, which is not essentially but as noted before, makes this more of a process than event. 

Labor strength is 'not' a problem for the Fed, if the CPI is cooperative as we'll learn next week, and by non-cyclical parts of the economy. There are quirks to deal with; but as this evolves, we have an evolution of a bottoming process.

So take Friday's turn as desired, as conforming (about 100 handles from down to up) to the idea, but without a classic washout below a rising S&P trendline, even though the New York Composite had achieved that earlier in the week. It just means everything is welcomed but tentative and somewhat reflects many fund managers endeavoring to deflect 'algo-selling' to hold above S&P 4200.

A stronger economy is welcomed; but it does NOT justify higher rates; so we'll hope the Fed understands that. Seasonal adjustments are quirky too; so while I want to see October denoting the bottoming formation this year; I cannot say that we don't have more roller-coaster-style activity to still contend with.

In fact I think it's likely that S&P does have to shuffle more; but for at least the moment that is pending.. again we didn't have a classic climax; and it just may suffice (because so many were 'pre-crashed'); but as noted, variables persist.

Friday's launch of the joint Amazon/Boeing satellites drives home what we'd already gleaned from SpaceX: with competition, satellite phones plus business and residential internet (at reasonably good but not fully fiber-level speed) will threaten the business models of all major cellular players; already showing an interest in joining with these projects, or marketing lower-cost entry products, that are a way to sort of compete without cannabilizing their primary business.

Amazon's Project Kuiper compete with already operational LEO (low Earth Orbit) SpaceX's Starlink, which currently consists of nearly 5,000 functioning satellites. Starlink is still growing; SpaceX has permission to deploy 12,000 of the satellites and has applied for approval for another 30,000 on top of that. 

Now we focus on CPI, and continued earnings growth which may support the idea of reasonable 'demand', slowing 'wage hikes', and more firms struggling all year making it through this gauntlet of unusual bifurcated activity combined with an off-kilter Fed trying to make up for their too-low too-long prior errors. I note that the total return equity profile will likely look decent a year from now.

Bottom line: this week Oil is down into our desired range; and that's actually the least noticed most important macro factor out there. US Jobs data worked well as the wage increases were nominal. Next week we get CPI which might affirm or deny the optimism created by Friday's washout and turnaround.

If Oil's dip turns-out to be a 'head-fake' (and that's possible) and runs back up into the 90's / bbl; well, that's counterproductive to our more optimistic case, if that happens (as relates to inflation, the Fed's tone, and continue disrespect it seems regarding Oil, and too much hubris about economists perceptions with regard to inflationary influences).

The pressures have been neutralized for the moment; but still tentative. So of course we would like to see 'capital discipline'; but the Fed's enforcement thus far is not merely ample, but superfluous considering what preceded. Done.

More By This Author:

Market Briefing For Thursday, Oct. 5
Market Briefing For Wednesday, October 4
Market Briefing For Tuesday, October 3