Weekly Market Pulse: Nothing To See Here. No, Really. Nothing

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things. And so, often we look at markets on a day to day or week to week basis and think something of significance happened and we ought to respond to it. Most people, according to this recent article in Nature, “consistently consider changes that add components over those that subtract them — a tendency that has broad implications for everyday decision-making.”. That is certainly obvious in most of the investor portfolios I’ve reviewed over the years which tend to look a lot like a financial episode of Hoarders.

What happened last week? Nothing. Or at least nothing of significance. Yes, there were some economic reports and the Fed released the minutes of its last meeting – as if everyone on the planet doesn’t know what Jerome Powell had for breakfast and that he isn’t raising rates until some really pricey cows come home. Well, actually, I guess it is IF some really pricey cows come home. The PPI report last week didn’t make a ripple in the markets but the commentariat was all aTwitter about inflation and economic overheating and whether Powell might raise in rates in 2 years or 3. The market was not impressed. The 10 year Treasury yield moved all of about 1 basis point last week while the 10 year TIPS moved, hold onto your hat, 5 basis points. Gold was up less than 1% and the dollar “plunged” (as one website put it) by 0.85%. There was obviously nothing in the data released last week that wasn’t already expected or dismissed for some reason. No surprise, no change in outlook, no change in markets and no reason to do anything but read and research, which is how I spent my week.

There were some interesting things going on last week and there was some interesting data released even if it didn’t move markets much. Jobless claims continued to defy the consensus view that the US economy is recovering robustly. Now, it does seem to be a bit of an outlier in that regard so it may be that there is something wrong with the data. Or maybe – I’m just thinking aloud here – when you give people a bigger incentive to file for unemployment benefits, like another $300/week, well, they do. What do they have to lose really? They might get turned down? My Dad always told me you don’t generally get what you don’t ask for so I’ve never been shy. And apparently neither were some 744.000 souls who asked for benefits last week. Will they all get what they ask for? Probably not but given the efficiency of state unemployment systems, their odds probably aren’t that bad. Jeff did a thorough rundown of the jobless claims divergence here

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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