Ivory Hill Wealth founder Kurt S. Altrichter predicts three possible scenarios how markets could react following today's unemployment data report.
What Happened: In a thread posted on X on Jan. 8, Altrichter outlined three potential scenarios:
- A "too hot" report triggering a market selloff.
- A "just right" report sparking a broad relief rally.
- A "too cold" report initially boosting markets before concerns arise over economic growth.
These vastly different outcomes highlight the significant volatility expected in response to the upcoming data release.
A "too hot" outcome, characterized by over 200,000 jobs added and unemployment dipping below 4.1%, is expected to trigger a notable selloff.
Equities would fall over 1%, with Treasury yields spiking toward 5%, thereby pressuring stocks.
Although Altrichter does not specifically mention cryptocurrencies, Bitcoin (CRYPTO: BTC) would likely follow stocks lower if his prediction turned out to be correct.
Conversely, a "just right" scenario, with 50,000 to 200,000 new jobs, unemployment between 4.1% and 4.3%, and wage growth at or below 4.0%, would spark a broad relief rally.
This would include modest gains across all indices, with tech and small-caps leading the way. Both asset classes tend to be correlated with cryptocurrencies.
In the case of a "too cold" report, featuring fewer than 50,000 jobs added and unemployment exceeding 4.3%, the initial reaction would be a rally driven by expectations of rate cuts.
However, growth concerns would then quickly take over, placing pressure on cyclical sectors.
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Why It Matters: The founder of Ivory Hill Wealth emphasized that markets are on edge and that a "too hot" outcome represents the largest risk, due to the possibility of Treasury yields reaching 5%, amplifying a broad selloff.
Altrichter suggested that a "Goldilocks" number, between 100,000 and 125,000 new jobs, would serve as the best outcome for calming Fed fears and initiating a solid relief rally.
Under the "too hot" scenario, small-cap stocks would lead declines, while technology and industrial sectors would only slightly outperform other sectors.
Gold would fall due to a stronger dollar and oil would hold up due to demand expectations.
Under a "just right" scenario, Treasury yields would drop approximately 10 basis points, weakening the dollar slightly, and gold would rally, with most sectors rising with tech, financials, cyclicals — and likely cryptocurrencies — leading.
In the "too cold" scenario, Treasury yields would drop sharply, while the dollar would weaken significantly, causing a notable gold rally; defensive sectors would outperform, helping to cushion overall market losses while cyclicals would lag behind.
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