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Asymmetry. · ANGLES.

• 0:01
  SPEAKER_00: Asymmetry, my weekly market review, September 8th, 2024.
• 0:07
  SPEAKER_00: Septembers can often be tricky as professional stock traders begin to liquidate
• 0:11
  SPEAKER_00: some of their positions ahead of the year end with tax considerations,
• 0:16
  SPEAKER_00: regulatory filings and the process of locking in profits in mind.
• 0:21
  SPEAKER_00: This becomes even more of a potential issue with the S&P 500 starting the month so
• 0:26
  SPEAKER_00: close to its all-time highs and an economic soft landing entirely assumed without
• 0:31
  SPEAKER_00: any questions asked.
• 0:34
  SPEAKER_00: This has created something of an asymmetry of risk where there is greater potential
• 0:38
  SPEAKER_00: for stocks to fall further on any disappointments than there is for them to rise on
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  SPEAKER_00: any upside surprises.
• 0:46
  SPEAKER_00: The effect is a skewed environment where the stock market will tend to be
• 0:50
  SPEAKER_00: constantly stressing about landmines everywhere represented by multiple data points.
• 0:56
  SPEAKER_00: The result was a miserable week for all risk assets,
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  SPEAKER_00: by some measures,
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  SPEAKER_00: the worst since the dark days of late 2022.
• 1:05
  SPEAKER_00: Wall Street reopened on Tuesday after the Labor Day long weekend in an anxious mood
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  SPEAKER_00: ahead of a week of primarily labor market related data that will provide the first
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  SPEAKER_00: tests of this potential risk asymmetry.
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  SPEAKER_00: Special attention was focused on Friday's highly consequential jobs report,
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  SPEAKER_00: the last big labor market indicator before the Federal Reserve's September 18th
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  SPEAKER_00: interest rate setting meeting.
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  SPEAKER_00: Everyone understood that the outcome of this report was capable of influencing the
• 1:35
  SPEAKER_00: size and pace of the rate cuts.
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  SPEAKER_00: An alarming 9.5% daily plunge in the price of Nvidia stock,
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  SPEAKER_00: the company ended up losing over $400 billion in value in just four days last week,
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  SPEAKER_00: And then late breaking news that the firm is the subject of an escalating antitrust
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  SPEAKER_00: investigation from the Department of Justice resulted in poor old CEO Jensen Wang
• 2:00
  SPEAKER_00: being booted out of the $100 billion net worth club.
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  SPEAKER_00: We also saw some rather bleak Chinese economic data, which added to the gloomy tone.
• 2:11
  SPEAKER_00: All the price gains from the month-end rally in the indexes quickly dissolved.
• 2:16
  SPEAKER_00: The decline then began to feed on itself and sharply intensified as the high volume session wore on.
• 2:24
  SPEAKER_00: Stocks ended the day substantially lower with the misery being most heavily
• 2:28
  SPEAKER_00: inflicted on the tech and AI stock universe.
• 2:32
  SPEAKER_00: Evidence is growing that investors may be steadily starting to take advantage of
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  SPEAKER_00: any strength in these kinds of names to take highly appreciated chips off the table
• 2:42
  SPEAKER_00: and then later reinvest the proceeds into more defensive areas of the market,
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  SPEAKER_00: including financials,
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  SPEAKER_00: consumer defensive,
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  SPEAKER_00: utilities,
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  SPEAKER_00: healthcare and industrials.
• 2:53
  SPEAKER_00: Global stocks took their cue and the route continued into the Asian and European
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  SPEAKER_00: time zones,
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  SPEAKER_00: including a 5% tumble in Japan.
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  SPEAKER_00: By the time Wednesday's New York session began,
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  SPEAKER_00: however,
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  SPEAKER_00: there was a calmer vibe and NVIDIA's freefall had at least temporarily come to a halt.
• 3:13
  SPEAKER_00: The job openings and labor turnover survey jolts showed that U.S.
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  SPEAKER_00: job openings fell in July by more than expected to the lowest level since the
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  SPEAKER_00: beginning of 2021 and layoffs rose,
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  SPEAKER_00: consistent with the multiple other signs of slowing demand for workers.
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  SPEAKER_00: The major indexes mercifully closed the day just a touch lower,
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  SPEAKER_00: but still with a sense of unease ahead of Friday's jobs report.
• 3:40
  SPEAKER_00: After starting out with some rather hopeful price action,
• 3:43
  SPEAKER_00: Thursday quickly deteriorated into another choppy down day for stocks.
• 3:48
  SPEAKER_00: Wall Street was seemingly very unimpressed with the economic babble that it was
• 3:53
  SPEAKER_00: hearing from both of the presidential candidates,
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  SPEAKER_00: including Trump's promise or threat to get Elon Musk involved in the governance of
• 4:01
  SPEAKER_00: an actual country.
• 4:03
  SPEAKER_00: If there was a silver lining,
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  SPEAKER_00: it was at least that the bruised and battered tech and AI names managed to
• 4:08
  SPEAKER_00: outperform the rest of the market.
• 4:11
  SPEAKER_00: Friday morning at long last arrived and the pre-market jobs report was finally unveiled.
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  SPEAKER_00: It was frankly a noisy mess that resolved nothing.
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  SPEAKER_00: 142,000 new jobs were added in August,
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  SPEAKER_00: which is only slightly less than expected,
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  SPEAKER_00: but the July number was revised sharply downward.
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  SPEAKER_00: Unemployment, however, ticked down from 4.3 to 4.2%, which was a bit of a pleasant surprise.
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  SPEAKER_00: Overall, the market seemed to reinforce the idea of a labor market that is weakening, but not yet weak.
• 4:43
  SPEAKER_00: Wall Street initially seemed frozen in place when markets opened,
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  SPEAKER_00: not really knowing how to react to the mixed numbers.
• 4:50
  SPEAKER_00: But eventually,
• 4:51
  SPEAKER_00: the risk asymmetry kicked in and stock prices dived hard for a fourth straight day
• 4:56
  SPEAKER_00: of losses to close out a very sour week.
• 5:00
  SPEAKER_00: Tech and AI names were especially brutalized, resuming their role of biggest losers.
• 5:06
  SPEAKER_00: Futures market ended the week indicating there is now a 70-30 chance of a standard
• 5:12
  SPEAKER_00: quarter of a percent interest rate cut over a jumbo half percent cut at the Fed
• 5:18
  SPEAKER_00: meeting later this month.
• 5:20
  SPEAKER_00: Just so you know, I'm very much with the majority on team quarter of a percent.
• 5:25
  SPEAKER_00: A half percent cut would probably serve to juice some growth assets at first,
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  SPEAKER_00: but it would also send out a signal about the Fed's nervousness about the economy
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  SPEAKER_00: and create a sense that they may have lost control of the situation and were
• 5:39
  SPEAKER_00: scrambling just to keep up with events.
• 5:41
  SPEAKER_00: Not a good look.
• 5:43
  SPEAKER_00: In my opinion,
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  SPEAKER_00: a jumbo half point cut would be like the pilot hitting the oxygen mass deployment
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  SPEAKER_00: button on an airplane.
• 5:52
  SPEAKER_00: Helpful?
• 5:53
  SPEAKER_00: Absolutely.
• 5:54
  SPEAKER_00: In the interest of all the passengers, undoubtedly.
• 5:57
  SPEAKER_00: But the message is still brace yourselves, everyone.
• 6:00
  SPEAKER_00: Something's gone wrong.
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  SPEAKER_00: Things are going to get rough and you can forget a soft landing.
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  SPEAKER_00: Pun intended.
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  SPEAKER_00: The most likely response will be some kind of mass panic on the plane.
• 6:13
  SPEAKER_00: I think we can all figure out where this analogy takes us in terms of what might happen to stock prices.