A 20% Drawdown Isn’t Out of the Question

DOGE Layoffs Running Wild

With DOGE layoffs running rampant over the past month, the street was closely watching the February non-farm payroll report for signs of labor market deterioration. The 151,000 jobs added number was below forecasts for 160,000, but it was far from the “fall through the floor” number that some were expecting. In reality, any DOGE cuts were likely to only have a minor impact on the entire labor market. To date, DOGE has fired somewhere between 60,000-70,000 people. The non-farm payroll report has shown the labor market adding about 150,000-200,000 jobs monthly. In other words, DOGE could slow the labor market, but it wasn’t likely to wreck it. Of course, the numbers will keep filing in and they’re unlikely to be done, so this will progress, but so far the labor market is still standing.

Tariff whiplash is clearly creating havoc on the financial markets. The constant stop/start/delay/exempt tactic of the White House that changes the narrative on almost a daily basis is difficult to keep up with. The market is clearly turned off by the uncertainty and the pressures are starting to build up outside of just the pullback in stock prices. Credit spreads are looking very vulnerable. The yen keeps strengthening. Q1 GDP is looking ugly. Jobless claims are much higher. And the S&P 500 is only 6% off of its high. There is plenty more room to go lower here and the longer that Trump keeps pushing his trade war, the more likely it becomes a real risk.