Closing Thoughts for the Week

The narrative about the demise of the tech sector appears to be a bit premature. There’s a lot to digest in January’s jobs report, which came in far above expectations and caught much of Wall Street off-guard. It further enforced the market’s belief that the Fed will need to act decisively and quickly. I still don’t think there’s a compelling case that a near-term risk-off environment is imminent.

I’ve been making the case over the past few weeks that we may not be in the midst of a pure risk-off move just yet, but that case is getting harder to make. The only number that hasn’t capitulated yet is credit spreads. We could see the markets hold on for a little while longer, but the case for further declines is getting stronger.

I’ve said that the market action over the past month or so has the look of a market rotation more than anything. Last week’s move, however, looked like a sell-off. A few observations from the past week.