A Relaxed Reflection on the Market and Bold Moves

So, the initial jobless claims came in at 227,000, well below the expected 235,000. On the surface, this seems to indicate that the U.S. economy is still holding up pretty well. But, I have to admit, the difference is quite significant, and it makes me a bit skeptical. After all, most analysts were predicting 235,000, so seeing it come in so much lower does raise an eyebrow. It's also worth noting that before the Sahm Rule was triggered, hardly anyone was paying close attention to this data. Now, with everyone on edge about a possible recession, it's become a key focus.

Hats Off to the Brave Investors
Let's take a moment to acknowledge those investors who held their ground during this tense period. Despite all the fears of a recession, they kept their faith and didn't sell off their positions in the big indexes like QQQ and SPY. And what a move that turned out to be! As soon as the jobless claims data came out lower than expected, the market bounced back, and those brave souls saw their portfolios rise by a good 2-3% in just a short period.

To be honest, I'm not one of those daring investors. I played it safe and decided to take a breather, cashing out a good portion of my stocks. So, while they enjoyed the full ride up, I only caught half of it. But hey, I tip my hat to them—they deserve the rewards for sticking it out.

The Sahm Rule and Easing Concerns
Now, let's talk about the Sahm Rule. Remember when the creator of the Sahm Rule and even Fed Chair Powell hinted that the recent spike might just be a false alarm? I was worried they were just trying to calm the market. They mentioned that the spike in jobless claims could have been due to temporary factors like natural disasters—hurricanes, storms, that sort of thing. The fear was that this was just a short-term bump, and things would normalize once the situation settled.

With the jobless claims coming in lower, it seems they might have been right. But, I’m not entirely convinced just yet. I want to see what the data says this week. If the numbers stay low and the Sahm Rule drops back below 0.5% from the previous 0.53%, then we can breathe a little easier. It’s crucial to keep an eye on this because if the Sahm Rule stays above 0.5%, unemployment could rise quickly, and that’s something we want to avoid.

Bond Market Outlook: TLT’s Potential
Regarding U.S. Treasuries, particularly TLT, I believe we are likely to see a significant upward wave before the next Federal Open Market Committee (FOMC) meeting in September. While some argue that current bond prices have already factored in the anticipated rate cuts for this year, I think the market will start pricing in rate cuts for next year once a September rate cut is certain. This could push TLT up by approximately 14% between now and the September FOMC meeting or shortly after.

If you’re looking for a relatively stable investment, TLT might offer a good opportunity. Unlike the stock market, which can be highly volatile, especially if upcoming jobless claims fluctuate, TLT’s rise should be more steady. However, I’m watching the stock market closely and prefer to wait for a slight pullback before buying in at better support levels.

Market Outlook and Soft Landing Possibilities
Assuming things go well and the CPI keeps dropping alongside jobless claims, we could be looking at a strong bull market for the next year or so. Everything would be back on the rise—stocks, bonds, even small caps. It would be like the market is just taking a deep breath before charging ahead again.

And let’s not forget, the recent market drop seems to have been triggered by the unwinding of yen carry trades due to Japan’s unexpected rate hike. Traders panicked, selling off, and created what might turn out to be a golden buying opportunity. Now, with Japan pausing further rate hikes, the market has calmed down, rebounding sharply. The fear of recession has subsided, and the market looks like it could continue to grow steadily for a while—unless, of course, something new sparks fresh recession fears.

Wrapping Up on a Positive Note
So, here's to those who had the guts to stay in the market—your courage has paid off! And for those like me who took a more cautious approach, there's always the next opportunity. The market might be on the verge of something great, and with the panic subsiding, it’s looking like we might just have a solid period of growth ahead.

If you enjoyed this post and found it helpful, please give it a like and follow my profile. Your support means a lot, and it helps me keep sharing my thoughts and strategies with you. And if you've read this far, drop a like to let me know you're out there—it’s the best way for me to see who’s really engaging with my content. Thanks for your continued support!