Over-steering  descriptively describes this market, and the world right now. In my view it was not so much the dissected Jobs numbers (they are actually fairly flat compared to March if you look at distortions in the Report); but the opening of China to other countries and businesses, that interested traders.

There's a lag effect on everything; with markets settling into accepting that the Fed will stay engaged in trying to beat-down inflation (without much success), because the 'infrastructure spending' alone is sustaining jobs levels overall. It is tough; there are risks; but there is also nominal bottom-fishing going on.

Outside of infrastructure, signs of recession persist; and spread inversions do suggest continuing (or new) recession; I view it most likely as 'double trouble'. There are almost 3 million people missing from the jobs market, which is part of why it 'looks like' near fully-employed. The 2 year might go above 5% as it all evolves; and that, along with year-end tax selling, are market headwinds.

The rotation is 'about the same'. The brunt of the hit to small-caps was done earlier this year; and more recently to the big-caps; especially in tech. China's statement today was just what we wanted to hear; regarding cooperation. For that matter China's embrace (for the moment at least) of business and even a remark about international cooperation was likely the newsworthy stimulant to the market versus jobs. I think with many managers advocating low exposure to equities; that probably enhances initial rebound in 2023 rather than slides.

Domestically the Housing market is likely the biggest non-geopolitical impact looming. The 'path to a soft landing' has narrowed; because the Fed was late and painted themselves into a corner. Perhaps that's what can result in early rebounds after tax-selling; with an ensuing housing-related Spring decline; but let's not get too far ahead of things for now.

This is NOT 2005-2008; when Housing was manipulated, hypothecated with CDO's/CMO's; and speculated on by phony appraisals and bizarre mortgage schemes too. Current homeowners typically have 2-4% mortgages; obtained from normal lenders doing proper due diligence prior to loan approvals. So as everyone has to live somewhere, anyone with a low interest loan isn't serious about selling (unless an increasingly rare job related move) and smart buyers are vanishing unless they get a sweetheart seller-financed deal. So you don't get the kind of implosion of older decades; but you should see more slippage.

In sum: in the short-term it's not over until it's over; and we hope that doesn't end with a nuclear strike by North Korea that requires immediate destruction of that rogue regime, to the detriment of their enslaved population.

In terms of U.S. military preparation; as so much has been oriented towards a defense (if necessary) of Taiwan; the Navy has been able to respond to these latest provocations from Pyongyang rapidly. The North almost triggered a war by flying approximately 180 fighter jets close to the Border this morning; and of course the prior day's ICBM launch that fell short of Northern Japan. All that is sufficient to focus at least one eye on that region; beyond Ukraine issues.

All of it impacts our markets to a degree; perhaps more than the Funds rate. A 'friendlier' business China matters a lot; so would Putin's departure at least as relates to Ukraine; and avoiding a systemic financial break. There is risk while there is also an erratic bottoming structure we've identified. Hence a slug-fest.

Given the Fed communicated their hawkish policies many months ago; it's not unreasonable to speculate if 'the market' has discounted this aspect for quite awhile now. That might be why the 'real' anticipation of the FOMC is to slow or moderate the pace of hikes; and there's too much discussion of how high may be high, as it's already at that level when it comes to 'servicing Federal Debt'.

I don't want to dwell on this aspect, nor Jobs levels, because you'll not change what's already baked-in, nor resolve all unknowns regarding what discounted aspects 'weigh' on stocks, versus other factors, including seasonal technicals.

I mention the latter because my view has generally been (and remains) that a combination of the June lows, and the ensuing September/October washouts, were an unusual or erratic (sort of still evolving) complex bottoming formation.

That doesn't mean we won't go lower, especially in the bigger-cap stocks; but it means (barring exogenous events) one might seriously consider one aspect of viewing this, which involves that overused word 'discounting'. What I mean is, further shuffles notwithstanding; this is the time of year to focus on 2023 in a sense, 'not' what's in-front of our eyes in this challenged time.

I can focus on the very near-term and consider that a political sweep Tuesday by Republicans will, at least briefly, infer less spending (though no assurance as both parties have done this beyond necessity of the pandemic per se), and both proclaim they will fight inflation and high taxes (often with 'qualifications').

The political part may be somewhat discounted; but I'm just looking at charts, as far as viewing a sort of complex bottom constructed over these few weeks.

And I know that many portfolio managers squeezed into big-cap stocks with a wrongheaded thought that they could enter and exit easily; thus defensive. In my view that made sense after I called the pandemic March 2020 low; but not so much as we got to 2021, because that was lifted by buybacks while insider selling became historical; and I really don't know why we were among the few who realized the buybacks and phony upside expectations were traps for fund managers who ventured into those big-caps 'after' the huge move.

My point is that this time of year is like 'Black Friday' coming up; not all will be recovering; and fewer big-caps will see higher highs; but many will rebound. It thus becomes on-sale; although some big-caps probably go lower before they rebound; while others either made, or are in the process of, making lows.

Also so many small-caps, including those involved with China, are destroyed sufficiently; often groveling around in narrow ranges for months now. Some it seems need funding and won't be able to get it without doing crazy pipe deals or suffering extreme dilution; while others have enough merit to secure that. (I use the expression 'sprinkling' in a handful of pure speculations; as not all will make it; but those that do may very well have good percentage appreciation.)

Bottom line: probably some sort of up-and-then down pattern evolves after the Election. For the stock market, the 'characters' of the drama matter less than a view of policies as they impact the economy, taxes.. and 'Energy Policy'.

As I often have said this market is about the Dollar and Oil; not just rates. And the overtures to restore 'their version' of normalcy in Commie-Capitalist China was well-received by the U.S. market Friday; in my view more so than 'Jobs'. I pointed out a majority of new jobs were in infrastructure and healthcare; both of which are minimally related to Fed policy of current rate shifts. If anything; servicing the Debt associated with necessary infrastructure pressed the Fed to chill in the not-too-distant future.

Yes, the shuffling market has pretty much depleted 'insurance' (Puts or Calls) in either direction; and that means there is still the opportunity of capitulation. Whether that's based on 'resident fear' of missing a rally; or the inevitability of 'bottom-fishing' as we work through tax-selling time; it's not simple; it doesn't invite trend following techniques for now; but here and there presents bargain entries; and there will be more between now and next month. A handful of the stocks we watch have Q3 earnings coming up; with individual responses.

More By This Author:

Market Briefing For Thursday, Nov. 3
Market Briefing For Wednesday, Nov. 2
Market Briefing For Tuesday, Nov. 1