Buzz on Business for December 7th, 2023

ADP Payroll Miss Extends to Four Months, Raising Recession Fears

The ADP payroll report came in way below expectations yesterday. That’s four months in a row; the payroll processing company has reported that the economy created fewer jobs than expected. This raised the probability of interest rate cuts sooner as opposed to later.

Stocks were down on the news as the worry du jour is of an economy that is too weak instead of the previous worry that the economy was too strong. Where are the Three Bears when you need them?

Market Report

Stocks sold off at the open in response to the jobs report and attempted to rally throughout the day but sold off into the close and finished near their lows for the day.

• The Dow Jones Industrials lost 70 points, 2/10ths of a percent, and closed at 36,054
• The S+P 500 gave back 4/10ths of a percent, that’s 18 points, and closed at 4,549
• The Nasdaq Composite had the worst of it. It lost 83 points, 6/10ths of a percent, and closed at 14,147
• The XRT, the S+P Retailers did okay. They were up 6/10ths of a percent and closed at 66.35, up .37

Mixed Signals from Interest Rates, Oil Slumps Below $70

• The two-year Treasury bucked the trend and was up two ticks. It now yields 4.597%
• The yield on the twenty-year was off nine basis points and closed at 4.393%.

Yesterday, we noted that oil had broken through some support. Today, the bottom fell out, and oil fell into another support zone.

• It was off $2.82 and closed below $70 for the first time since June. A barrel now changes hands at $69.19
• Gold was up $7.00 and a troy ounce will now set you back $2,043.

A Sea of Contradictions: The Uselessness of Market Predictions

One of the ways that you can tell the economy and the markets are in a transition phase is that the commentary is inconsistent and contradictory. Earlier this week, we here at the Buzz on Business reported on a dour and pessimistic report from JP Morgan that predicted doom and gloom and 4200 on the S+P 500 in 2024.

Today, we saw a report, although it came out earlier this week, from an equally credible source predicting 5500 on the S+P sometime in the New Year.

I had everyone here at the Ministry of Truth look into this, and we found ten predictions, all from credible banks, everyone a household name. The predictions were a perfect bell curve with the mean right about where we are now. No change. They were random.

In our opinion, these predictions are worse than worthless. They fill the logical space between random noise and a fussy infant on a nine-hour flight. I am absolutely serious when I say that the banks and brokerage houses that hope to earn your trust and the trust of the investing public and yet issue this nonsense should be ashamed.

Early in my career, I had a colleague who had worked for one of those big banks, and when I complained about this kind of thing to him once, back in the day, he explained to me how big clients and insiders—how he—used reports like these, to turn a profit. We love profits here at the Buzz on Business but stand by our complaint about any predictions of this kind. We think that if you care about your profits, you should ignore them and most of what passes for business news.

A Bold Prediction: Dow Jones to Break 145,000 by 2043?

But we will break our rule and make a prediction here on this podcast. The Dow Jones Industrial Average, which stands today at 36,054, will crack 145,000 in 2043. Please write it down!