10-5-26 Q4 Market Outlook - Will Strong Markets Finish Strong?

Hey, good morning.

Welcome to the show.

Of course, it is Monday as we kick off really the first week of earnings.

There'll be a little smattering of earnings this week.

We really get into it a lot next week, uh, in particular.

But, um, yeah, back into earnings season, that means a couple things, of course, and we'll talk about this this morning 'cause today's show, we're gonna kind of cover the outlook for quarter four and talk about kind of what, what's expected as we get into quarter four.

But the point is, is that, um, earnings season now getting back underway, that's gonna give the market something to hang onto outside of the economic data.

Speaking of economic data, let's talk about Friday's employment report, came in much weaker than expected, 29,000 jobs.

Now, what's important about that is not just the number itself, and a lot of people were just looking at the numbers like, "Okay, this is a really weak number." The trend of jobs has been falling rather sharply, um, r- really since about two years ago.

We've had, we had, of course, coming out of the pandemic, we had shut down the economy.

When we opened back up the economy, we had all this stimulus coming into the market, so we hired a bunch of people because demand was accelerated because of the money we'd sent to households, and we were trying to get inventories back online, manufacturing back online, et cetera, after being shut down from the pandemic.

So we had this big surge in hiring.

Well, ever since then, that surge of hiring has been declining as that money is, is, uh, was used and has been coming out of the system.

So as, as we've talked about before, one of the things that has been kind of baffling is that we've seen interest rates go up, but we didn't have a recession.

We saw the yield curve invert, but we didn't have a recession.

We saw all these things that, that didn't, that have always preceded recessions normally, did not generate a recession this time.

It was because of all that money that we'd stuffed into the economy, had, had basically given the economy stability through this shutdown and recovery.

However, since then, the markets have returned much more to normal, right? Inflation has returned to normal being, you know, from over 9% down to 3%, so we've done a good job of reversing inflation.

We've done a good job of getting economic growth back into normal, kind of a normal perspective.

We're growing around 2, 2.5%.

So everything's come back to more normal levels.

But what we're still seeing is this really weak job growth.

And not just the 29,000 jobs that we had this last Friday, but that big 169,000 job report we had last month was revised lower.

In fact, we revised the last two months down about 60,000 jobs altogether.

So the trend of jobs growth, much more important than the number itself.