Employment/ Put Call ratio/ U of M #’s/Performance Update

Employment

Jobless claims were released yesterday, May 15^th.

Using the 4-week moving average, which was 230.50k, it looks like claims have pretty much stayed in a range from 200 to 250k over the last 4 years.

The Federal reserve has indicated that without a weakening in the employment picture, the risks are evenly balanced presently not offering an opportunity for them to cut rates, despite the calls for it from the White House. Hard to argue with the numbers.

Then we came across this post below, which makes us think the employment demand picture may be stronger than some believe.

Link: https://x.com/LizAnnSonders/status/1922253609548337640

But complacency can be dangerous. According to the chart below the odds of unemployment not moving up soon are stacking up against us from an historical perspective.

The unemployment rate has been “in a narrow range” for the last year. But what are the odds of *another* 12 months of stable unemployment? It would be a very rare outcome, indeed.

Link:  https://www.linkedin.com/posts/jeffreyclevelandinvestor_after-listening-to-chair-powells-press-conference-activity-7326581831410028545-Rcrh/?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAR38RMBuQwDv28YpifNKbpQm1qFKYHmGg8

Put/Call Ratio

There was a bit of focus on the Put/Call ratio this week.  The index hit its lowest level since November 8^th, 2021, on a closing basis at .53. The VIX has responded accordingly, as well as the Price/Earnings multiple on the SPX.

From the below chart we are not sure that is indicative sign of anything.

University of Michigan

The University of Michigan surveys were released today.

This may be considered one of the better examples of “soft” data that exists. The trend is not hard to spot of late.

If we take a deeper dive with respect to these 3 indices it appears that political views play a major role. Below we chart the surveys from both a democrat and republican point of view. In the lower panel of each chart, we put the difference between those 2. It appears rather obvious that whichever party is occupying the White House feels better about things.

Sentiment

Consumer Expectations

Current Economic Conditions

What’s the takeaway? We are simply not sure that a greater negative bias is not over impacting the surveys during times when “your” party is out of the white house.

Performance Update

MS performance snapshot.

Have a great weekend!

Best,

Meraki Trading Team

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