Macro Observations

The markets got an unwelcome surprise this week when during its annual benchmark revision to its non-farm payroll numbers. Is the jobs number even worth following any more? The BLS is reporting nearly DOUBLE the amount of jobs actually added every month. What if stocks are trading higher based on a reality that doesn’t exist?

While the consumer is usually the driver of economic activity and is likely to again this time around, there’s one area of the market that looks like it could be particularly vulnerable to a major credit event - the private credit market. A recent report by the IMF offered its opinion on the risks currently within the private credit in damning and in no way unclear terms.

If you look back at the financial markets over the long-term, there are some investing principles that are generally accepted to be true. Over the past decade, a lot of those relationships have been flipped upside down. One relationship that’s gotten really interesting has been that of junk bonds and small-caps. Are we setting up for a mean reversion that could crown the market’s next leader?