Quote of the Week

“Possession isn’t nine-tenths of the law. It’s nine-tenths of the problem.” – John Lennon

Tech Corner

Quad II is now happening. Last week the markets were up substantially, with the Nasdaq leading the way up +2.18% and the MSCI-EAFE, the laggard, up +1.37%. We are solidly in Quad II, so it looks like this could continue for at least a while. Remember Quad II is growth increasing and inflation increasing. We are positioned in equities and commodities with an emphasis on Small Caps and Energy. Go fill up your tank and you will know what I mean.

One indicator that really tells the story is Retail Sales which jumped +0.7% month over month as a strong job market and healthy personal balance sheets supported additional spending. Purchases at hobby and sports stores contributed to strong gains. Spending at restaurants and bars rose just +0.3% month over month, indicating the Delta variant depressed sales last month. But that will really be changing for the better as the number of COVID cases has dropped by over 50% over the last four weeks.

The economic data points released last week indicate the economy continues to rebound. How could it not, with $4.25 trillion sitting in consumers’ pockets and COVID cases declining? The only negative issue is the supply chain problems, but those should be starting to clear up with West coast ports now starting to work around the clock.

My thoughts are that now is the time to be invested. At least that’s what the math is saying.


Larry’s Thoughts

This article from The Real Economy illustrates the tight job market and how it looks going forward. Job seekers are sitting in the “catbird seat”.

Here is the link, but I’ve printed the article for your convenience.

https://realeconomy.rsmus.com/initial-jobless-claims-hit-a-pandemic-low/

Initial jobless claims hit a pandemic low

OCT. 14, 2021 BY TUAN NGUYEN

In another sign of the continuing tight labor market, new jobless claims hit a pandemic low at 290,000 for the week ending Oct. 9, following an upwardly revised reading of 329,000 in the previous week.

This significant drop continues to highlight a labor market in which demand for labor has been the main driver as businesses scramble to find workers and meet surging demand.

We should expect new claims to decline in the coming months as the spread of the delta variant eases and as the effect of Hurricane Ida is put in the past.

The total number of claims for all programs for the week ending Sept. 25 decreased to 3.6 million from 4.2 million in the prior week, and from 24.9 million compared to a year ago during the economic lockdowns of the pandemic.

While a drop in pandemic-related federal unemployment benefits, which expired on Sept. 6, led the decline in overall claims, we also saw a significant drop in claims for a non-pandemic extended unemployment program, to 222,613 from 390,656 in the previous week.

Although this is a good sign for the labor market, we cannot rule out that a fraction of such a drop in continuing claims might come as those categorized as unemployed find, for whatever reason, less incentive to work and drop out of the labor force. Workers who are not looking for a job are not considered in the labor force.

This could explain the drop in the labor participation rate in the recent payroll report from the Bureau of Labor Statistics.

At the state level, California posted the largest decreases of 14,733 new claims for the week ending Oct. 2, following by Washington, D.C., and Michigan, down by 3,905 and 3,370, respectively. New claims were up in Pennsylvania by 1,707 for the same week.

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These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

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