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Market Snapshot December 2, 2021

Good Thursday AM,

Equities screaming higher as there continues to be less concern over Omicron and people buy the dip of the past week. Borders may not be closing after all. Not sure what all of this will mean, but if the strain is both more transmittable and less virulent, it will actually be bullish for markets as we will reach herd immunity that much quicker… but I am ahead of myself right now. We will see what Dr. Fauci has to say since he continues to seemingly be the only voice in the room. Mortgage bonds are underperforming in a big way, pushing rates up higher when Treasuries are flatter. There is an important metric that bond traders look at for direction. That is the spread (difference in rate) between the 2-yr Treasury note and the 10-yr note. If you think of it logically, you should be paid more interest the longer the bond (loan). When that spread has inverted, it has predicted about 17 of the last 17 recessions… so let’s just say it has a bit of correlation to the economy. Right now while the spreads are not inverted, they are very flat and it is concerning. If the Fed were to raise the short term rates too soon, it would currently invert the curve and the Fed does not want to force a recession. I see rates staying low for this and other reasons, but keep in mind that low is relative (always +/- .25-.50). don’t try and time the low point. Lock when the rate and payment is comfortable. Tomorrow is the monthly jobs report. Expect volatility. I can’t say it more plainly.   

A tale of two parties. Of the 10 states with the strongest recovery in payrolls since February 2020, all have Republican governors and eight were carried by former President Donald Trump in last November’s presidential election. Of the 10 states with the worst job performance, eight have Democratic governors and eight were carried by President Biden. Conversely, the 10 states experiencing the highest rates of Covid-19 infection and death are predominantly Republican and those with the lowest rates are mostly Democratic.

Not sure how much you should be paid? Colorado could offer some clues. A state law requires Amazon, Palantir, Walmart and others to disclose expected pay ranges. The WSJ’s Inti Pacheco and Chip Cutter sorted through more than 5,000 postings.

Please remain safe and healthy, make today great!