Iâm sending you this video earlier than usual. Why? Because tomorrow, the market will take a dive⦠And I want you to be prepared. For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. A Message So Important, It Couldnât Wait Until Tomorrow Last week, I told [â¦] Youâre receiving this email as part of your subscription to Andrew Zatlinâs Moneyball Daily [Unsubscribe]( [Moneyball Daily] A Message So Important, It Couldnât Wait Until Tomorrow February 01, 2024 Iâm sending you this video earlier than usual. Why? Because tomorrow, the market will take a dive⦠And I want you to be prepared. [CLICK HERE TO LAUNCH VIDEO OR READ THE FULL TRANSCRIPT BELOW »»]( For a transcript of this video, see below. This transcript has been lightly edited for length and clarity. A Message So Important, It Couldnât Wait Until Tomorrow Last week, I told you to expect a major selloff. And itâll happen tomorrow. Today, Iâm doubling down on this forecast. And Iâll explain why Iâm confident itâs almost here. Did Powell Get a Sneak Peek? On Wednesday, Federal Reserve Chairman Jerome Powell threw cold water on the possibility of interest-rate cuts in March. Why the pessimism? Thereâs cause for speculation, to be sure. But I believe Powell got a sneak peek at tomorrowâs payroll numbers⦠And those numbers are the key to Fridayâs market selloff. Let me explain⦠The Consensus Has It Wrong You see, the market has been following the narrative that the economy is weakening. And as a result, weâll see rate cuts soon. The thing is, Iâve been saying the exact opposite. Based on my research, the economy is strong. And that puts me at odds with the consensus. Consensus is expecting weak information to be reported tomorrow when payroll figures are released. But make no mistake: I expect this figure to be super strong. And Iâve got three reasons why⦠âTis the Season for Strong Payrolls First, thereâs the issue of model mechanics. You see, we often get a strong payroll number in January. Take a look: Going back to 2012, January payroll figures have reached 300,000 half the time. Thatâs a strong number â for reference, consensus is forecasting 170,000 tomorrow. Thatâs a number so low, itâs only happened twice in the past 12 years. The thing is, this strong payroll figure to start the year isnât by accident. On the contrary â itâs by design. January is prime layoff season. Seasonal retail workers are usually let go. And poor weather results in a release of workers in sectors like construction and trucking. Essentially, each year, almost three million people are laid off. But to arrive at the payroll number, that expected three-million figure (the number of people expected to be let go) is offset with a three-million seasonal adjustment. And the difference in those figures is how the payroll number is reached. It sounds confusing, but itâs essentially a way of looking at how few people were fired in a given month. This time of year, that difference is generally larger than what most âexpertsâ forecast, which is why I think weâre in for a bigger number. Jobless Claims Are on the Way Down Second, Iâm projecting only a few layoffs this season. Let me show you why: If you notice, jobless claims are at a four-month low. And theyâre trending down. Companies have been retaining their workers and using who they have to run their âlean and meanâ businesses. Furthermore, as companies were trimming the fat, they didnât hire many people in the second half of 2023. In fact, hiring activity last year was the second weakest in the past decade. And fewer hired people translates to fewer fired people⦠Which brings me to reason No. 3⦠No Need to Let Go One reason companies arenât big on firing right now is because they donât have to fire. Remember, the economy is stronger than what most experts think. Gross Domestic Product for Q4 2023 was 3.3%, the second-strongest quarter since 2021. Corporate profits are up, and companies are humming with minimal staff. Thereâs no reason to rock the boat and let people go. Thatâs why you can expect to see strong payroll numbers tomorrow. In a moment, Iâll explain how we can take action as investors. But first⦠Keep an Eye on Wage Growth Itâs not just payrolls that the stock market is watching. Wage growth is important, too. The market wants to see wage growth hovering around 3%. But in California and other states, the minimum wage is set to jump more than 5%. This jump, combined with a strong payroll number, is going to upset the stock market. And the selloff will begin. How can we get prepared? Youâve Got a Few Options You could buy puts and cash out tomorrow when the market falls. You could rotate your investments. Keep in mind that the high-tech sector hates high interest rates. Consider selling some high-tech stocks and investing elsewhere. Or you could keep some investing cash on the sideline â for now, at least. I expect the market will drift for the next month or so, and thatâll offer some intriguing buying opportunities. Let me be clear: I still expect 2024 to be the âYear of the Bull.â But starting tomorrow, weâre going to have to weather a market storm. So get ready. Weâre in it to win it. Zatlin out. In it to win it, [Andrew Zatlin] Andrew Zatlin
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