Shocking data revelations are probably being overstated with respect to all the market impacts; which Thursday's nice recovery provides testimony for. Of course, revelations of 'cracking' in more jobs sectors (initial claims), ahead of the official formal report has some economists in a tizzy; the 'ying & yang' of it all is also what should well tame the Fed's zeal.

Declining jobs ongoing for months now; so this isn't news. It's just a 'too-late', then 'too fast to hike', pace of movement by the Fed which exacerbated this, in addition to the Fed overlooking the non-monetary-policy price impacts; like an ongoing war; the China shutdown emergence; plus legislated Defense and infrastructure spending, none of which are much impacted by monetary policy.

After Thursday's Close, the Fed Balance sheet report came in at 8.59 Trillion while borrowing at the Fed Discount Window fell by 18.5 Billion. So still huge, but a slight trimming. Lending activity (loans to bridge banks) down slightly at 174.6 Billion. Lots of funding programs as the Fed 'whittles it down' just a bit.

Some level of stress persists in the Banking System; but less than before will be the general takeaway. It's hard to say whether this reduces 'fragility' in the system; it's not a collateral problem; but some are still jittery and that's where 'real estate' (and non-performing commercial loans) remains a concern.

In sum: frenetic analyst hunting for explanations regarding jobless claims is a bit amusing; it's like they are searching for 'cracked' Easter eggs that lost their yolk. Well, poor efforts at jokes aside, the bifurcated jobs market is a variation of the bifurcated stock market; as it varies considerably in different segments.

So we got what can be termed a 'salad buffet' from the Fed; so when you add the other ingredients and condiments; and toss it all together, it's hard to say if it will be tasty.. or even healthy. But if we apply seasonal norms to extended S&P levels, one could imagine a 2-3 week 'window' to put something more on the upside for a few stocks, even if a 'window' of problems could ensure. Lots might simply depend on whether there's another banking crisis (poor loans in commercial space contributing) which I think the TD (Canada's largest bank) concern brought to the fore a couple days ago. Ripple effects can't even yet be calculated, because there's no failure to assess. However there's concern.

This doesn't have to be a back-to-back down year; but it can be a boring year without a 'clear' landing. Suspecting that has been our neutrality viewpoint; at the same time this has been a wait-and-see environment, we're open to what I call a window to rally; but also a window to subsequently drop thereafter. So I'll reiterate up or hold is slightly better odds than down near-term but requires not having another immediately banking crisis or similar event. Avoiding that, ideally, could also open windows for something more favorable, if for-instance the war finds a ceasefire, or comparable cessation of hostilities. Nothing yet..

Weaker, but not collapsing, is what the market seems to prefer for Friday's all important (to the Street.. and probably as justification / motivation for the Fed to ease off).. Jobs data. So maybe 200,000 give or take will be welcomed. If it is a 'hot' number, the notion is that the Fed will maintain its hawkishness.

Sort of iffy; since it won't be terrible given the key industries...higher for longer likely remains the prevailing policy; but that doesn't mean more than one more 25 basis point hike (if at all); so if the market sells-off on that idea; it likely will still have a subsequent rebound (and we're talking about next week).

There's obviously overhead S&P resistance; and ongoing neutrality for most stocks and sectors. 4100-4200 resistance prevails; with debates of economic weakness just taking hold now.

That's what stimulates concern about revisiting the S&P lows as companies of course tighten their belts, layoffs increase, and the banks still get battered. It's tough to sort this out, because it can't be. Stocks fluctuate; many small caps do show interesting disruptive or innovative technologies; few have sufficient money; so lots of them retain overhanging dilution or funding issues. That, in many cases, is a result of going public as SPAC IPO's and then finding most SPAC players evacuated. Of course some (we try) will find traction and revive over time; but it's not easy for many, regardless of their business focus.

So given all this, I suppose the Fed 'feels' the anxiety of these times ... if they are not brain-dead, although the rapidity of rate hikes made life more difficult.

Many of the equity moves in big stocks are simply multiple compression that's trying to justify higher prices. In the small stocks, that's where liquidity is costly, but more needed. And then there's the side issue of China 'refining' of rare or critical minerals, which often can't yet be processed in the U.S. or elsewhere. I am not particularly worried about that relationship collapsing; as there really is mutual need with China, which is what Tim Cook was addressing on his visit.

Enjoy the holidays, and avoid deep rabbit holes ..

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