Today's Post - https://bahnsen.co/3NJs88A

One of my least favorite things I see analysts do on Wall Street is take various historical incidents and attempt to extract likely future market behavior from it. “7 out of the last 9 times a team from California won the World Series, the market was up over the next 120 days” (or something like that – I made that one up to make a point; actually, that example there would be significantly more logical than some of the nonsense I routinely see).

This morning I read a report that said “nine of the last nine times the real Fed Funds rate was rising, the S&P 500 was up.” Okay, fair enough. Not super helpful predictively, though, since one only knows what the period of time the real Fed Funds rate is rising in hindsight (from a start to an end), and periods within it can be quite negative (see: 2022). But then this report went on to say: “in the 12 months following a period of a rising fed funds rate the market was up double digits four of the nine times and down in the remaining five.”

Crystal clear. Now who won the World Series last year?

The ADP jobs number came out showing explosive June private sector job creation (+497k, double expectations). Leisure and Hospitality was nearly half of that, so it does seem a bit lumpy. Of course, we also know weekly initial jobless claims have been rising, so there is a bit of a mixed bag in the labor data with the skew still being to the positive side. We shall see what the BLS report generates for June tomorrow. Bond yields went up and stock futures went down after the ADP report.

Links mentioned in this episode: