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The latest completely-made-up and watered-down inflation numbers came out, and they are, surprise, surprise, exactly as anticipated. We’ve become like China in that respect: a number is “supposed” to be certain level (let’s say: Real Inflation divided by 10) and then, oh mah garsh, the official number is the same.
OK, time for some self-flagellation. Let me set the scene: I was at Philz Coffee this morning, right at the opening bell and away from my computers (which is rather unusual). I was watching my positions, and the one that was really bugging me was Netflix (NFLX) which had climbed all night. I had September puts on it, and it was really going the wrong way. I tried to read the paper, but I couldn’t wait to get back to my machine and get the hell out of my puts, so I left. The moment I got home, I dumped my position at a loss. I think you know where this is going, because I’ve marked with an arrow the moment I dumped them:
The unemployment numbers just came out, and it was another gift for the bulls: weakness. The job growth was much weaker than expected, and the unemployment rate is creeping up. The logic here, of course, is that this lameness will provide political cover for Powell to issue a cut in interest rates to provide a boost to the current administration. Market historians will acknowledge that every major recession kicks off with the Fed cutting rates, because they need to do that in order to goose the economy. It doesn’t matter now, though, because the markets are raging on the news.
