Authored by Peter Tchir via Academy Securities,

Today we will hit two topics, NPF and MOAB.

About as good as it gets for the economy, not so good for Fed cuts.

Not only were the headline jobs better than the top estimates on Bloomberg (303k jobs). We also revised prior job reports up by 22k.

Wages are doing reasonably, with monthly wages coming in 0.3%.

What is most impressive to me is the unemployment rate coming down to 3.8%. That occurred while participation rate increased nicely. At 62.7%, it is just a smidge below the post covid high of 62.8%. The Household Survey (which is used for unemployment) added 498k jobs!

Definitely not “goldilocks” for the Fed, but good for the economy.

Nothing and everything. MOAB or Mother Of All Bombs isn’t front and center but Escalation and Expansion is. Thursday’s big drop in stocks was precipitated by fears that Iran was preparing to attack Israel. Part of why stocks were higher overnight and are still strong post NFP is because nothing happened overnight in terms of escalation and expansion (you can see that in oil too, which is hovering around unchanged).

We dealt with our thoughts on Hedging Geopolitical Risk at the start of the year and remain convinced of two things:

Make no mistake, the global Game of Chicken continues, and in my analysis, the “enemy” sees weakness and thinks we will veer.

So, once the market is done digesting the payroll data (which was truly exceptional),  look for risky assets to trade poorly (lower stocks and wider credit spreads).

I think enough support has been broken on the longer end of the yield curve (and most people seem bullish bonds) that we could see that crack, especially if oil does gap higher.

The talk from the start of the year has been about Geopolitical Risk, it is definitely time to act and not just talk as the risk of clear and present danger is very high at the moment.

So, for me, MOAB as a euphemism for the geopolitical risk outweighs the NFP report today.