November's strong jobs report appears to be complicating the economic soft landing narrative. John Hancock Investment Management Co-Chief Investment Strategist Matt Miskin says stock market volatility reflects a "never-ending late-cycle environment" where employment remains the "strongest pillar" of the economy.
With the S&P 500 (^GSPC) up 20% and the NASDAQ (^IXIC) up 37% year-to-date, Miskin suggests investors should trim risks after November's big turkey rally.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
[AUDIO LOGO]
RACHELLE AKUFFO: Stocks volatile, but higher this morning after initially dipping as the hot payrolls report complicates the labor market story. We got JOLTS data earlier in the week that suggested the market may be decelerating. This morning's report showing unemployment has ticked down and that wage growth number remaining high. I want to bring in Matt Miskin, John Hancock Investment Management co-chief investment strategist. So Matt, as you're trying to make sense of the numbers that we're seeing here, how does this bode for markets?
MATT MISKIN: I think right now it's not as soft of a landing as it was earlier today. It's amazing how widely interpreted this soft landing scenario is. But what we're seeing is the jobs market has been the foundation of the US economy, the strongest pillar, and it continues to be so.
It just feels like a never ending late cycle environment where the economy continues to push along here from the employment picture. But what you saw over the course of the day is the dollar has actually strengthened a bit, the 10-year Treasury yield has risen, and the two year yield is also risen as you touched on earlier. And so that's actually placing a bit less of a rate cut/pivot party types push in the markets right now.
So some of those early gains were faded. But in our view right now, it doesn't really change much. We think the Fed is going to be on hold. We think the market's going to be choppy here after a huge run. And for now we're just being patient.
RACHELLE AKUFFO: Indeed. I mean, it looks like the Fed can afford to at least let the medicine continue to take hold as it works its way through the real economy. But even as we look at year to date performance for the S&P 500 and the NASDAQ, still up 20% and 37% respectively. But you say it's not about, sort of, the earnings boost because the earnings growth story didn't really seem to happen this quarter.
MATT MISKIN: Yeah, what we're seeing is a lot of multiple expansion. So the four PE on the S&P 500 was about 16 to 17 times. We're now more at 18 to 19 times.
At the beginning of the year, there were a lot of bears and everyone was predicting a recession. Now there's a lot of bulls and there's very little recession calls. So we've seen a pretty significant sentiment shift.
To us, sentiment is a very difficult thing to actually position for. If you want to be a contrarian and be bullish when everyone's bearish, you would have actually done well this year. But now the question is now that everyone's bullish, are you peeling back some of that risk?
In our view, we want to focus on the fundamentals. We're overweight quality on the equity market, overweight the US. But we are looking to trim some risk here after such a huge run in November.
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December 09, 2023 at 01:07AM
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Strong jobs data muddies soft landing bets - Yahoo Finance
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