Daily Commentary

MarketMinder’s View: This article mentions some specific companies, so we remind readers MarketMinder doesn’t make individual security recommendations. Our focus is on the broader theme only: What do rising job cuts mean for investors? At the top, the article discusses how companies in America and Europe are reducing headcount, and without the latest labor data from the Bureau of Labor Statistics to confirm either way, these anecdotal layoff stories may signal trouble for the broader economy. The bulk of the piece explores why companies may be laying off workers, with reasons ranging from tariff costs to AI investment replacing some entry-level work. So far, the evidence for the latter seems scant: “Businesses loaded with white-collar workers such as those in the information, finance, and professional services sector have seen job growth in tandem with increased AI usage, [economists] wrote.” As for the overall economic effect, remember jobs are late-lagging economic indicators, so whether they are growing or contracting, they aren’t likely to shed much light on where the economy is headed next. Moreover, some high-profile examples aside, “Weekly state jobless figures so far do not show a measurable surge in layoffs, but job growth remains subdued. Payroll provider ADP on Tuesday estimated an increase of 14,250 jobs in the four-week period ended Oct. 11.” The available data are in better shape than the discussions surrounding them—a sign the bull market has more wall of worry to climb.

MarketMinder’s View: The titular deal is “pretty much finalized,” according to President Donald Trump, so here are some of the details. In exchange for the US lowering tariffs on South Korean goods to 15% from 25%, Seoul will now “make $150 billion in [American] shipbuilding investments, with an additional $200 billion earmarked for an investment pledge designed to look like a similar agreement with Japan, South Korea Policy Chief Kim Yong-beom said Wednesday. That suggests South Korea can use not only equity but loans and loan guarantees to fund the investment package, a key concession.” That helps clear some uncertainty, particularly for Korean automakers since US duties on car imports “had remained at 25% while the talks continued. That left the nation’s automakers at a competitive disadvantage against their Japanese rivals since Tokyo finalized its deal in September. Those duties will now come down to 15%, according to Kim.” A couple of things for investors to note here. First, the “deal” is technically a memorandum of understanding, which isn’t legally enforceable, so a bit of uncertainty lingers. Second, it is also unclear what the agreement’s status will be if the US Supreme Court strikes down tariffs. With oral arguments before the Supreme Court starting November 5, this might all be moot—or subject to renegotiation—in a few weeks. Not that that would necessarily shock stocks, which are well aware of the proceedings.

MarketMinder’s View: This piece is kind of all over the map, but the essential implication is that the main force powering stocks higher is allegedly clueless retail investors who should know better than to “buy the dips” and who are irrationally ignoring scary headlines and the Greek chorus arguing Tech stocks are overvalued. Short-sellers are frustrated that these folks, supposedly, are keeping pullbacks shallow. Analysts are frustrated that younger investors aren’t heeding “fundamentals” like finance-101 models of company value. It all reads like sour grapes to us, with a side of condescending elitism. When we read the anecdotes here (which reminds us, MarketMinder doesn’t make individual security recommendations, and those here merely illustrate the broader theme), we see something different: more evidence that younger folks are generally more bullish. This is a long-running trend and one sentiment surveys show, too. And we think it is worth considering the causes. We suspect they are twofold. One, younger folks know they have many decades for their money to work toward their goals, helping them stay disciplined through the shorter-term ups and downs. Two, it has been almost 20 years since global markets endured a traditional bear market—the long grueling kind that accompanies a full-fledged recession as the business cycle resets. The kind that sends unemployment skyrocketing, particularly among those new to the workforce—with joblessness lingering long after the bear market and recession have ended. Most young investors today were in school when that last happened, not in the market, and don’t have the scars more seasoned investors do. That will naturally lead to more optimism and risk-taking. Now, we think these are generally fine phenomena, and we love seeing young people saving diligently and learning the magic of stock markets and the compound growth they deliver. It is also nice to see a crop of investors who aren’t beholden to the industry’s conventional wisdom, which is generally priced in and not much help. But it all risks enabling the next bear market to be a big shock to the system when it happens, and it wouldn’t surprise us if it amounted to the next bear market being more of a monster than the last two. Not a prediction, but a hunch, a scenario we think worth keeping in mind.