Disclaimer:
Nothing contained in the following content constitutes an offer, solicitation, or recommendation regarding any investment management product or service, or the offer to sell or the solicitation of an offer to buy any security; The following content is purely for information only and is based on information available at the time it was created. It does not take your financial situation or goals into consideration, and may not be suited for you.
Transcript
Welcome to Market Review, a podcast from Zimark, where we will be discussing updates on the financial markets on an ad-hoc basis.
I am Henry, digital marketer at Zimark, a digital-powered advisory boutique focusing on middle markets.
I'm Jack, founder of Zimark. It is Saturday, October 7th at 2 pm in China. Today, we will focus on the latest developments for indices and what we expect for the rest of the month, as well as possibly towards the end of the year.
As we anticipated, the market bottomed at the quarterly options expiration, and a new short-term trend formed towards Friday as market makers and participants started to balance out their gamma amid breadth bottoming.
The labor market is performing better than anticipated. The non-farm payrolls for September came in at 336k, which is significantly higher than the forecasted 170k and the previous figure of 227k. The labor participation rate has remained stable, with a slight increase in the unemployment rate for September.
The labor market is strong. On the surface, it appears that the market is overlooking recession risks and positioning for an end-of-year rally. However, if we examine the credit market, it continues to outperform in the current environment.
As many companies have resorted to issuing convertible securities, restructuring, and managing existing debt on their balance sheets, the high yield rate is likely to continue exerting pressure on operations. Much of this debt has yet to mature, which means that the risk of recession has yet to materialize and be reflected in the market. With the credit market outperforming beyond the mean reversion range, we are likely to see a short-term consolidation or pullback in the credit market soon. This could lead to at least a short-term upside in the equity market from our current perspective. However, if such a pullback is followed by a consolidation, the credit market may continue to challenge equity valuations.
Also, if CPI and PPI prints come in hotter than expected this month alongside a strong labor market, we may re-enter the recession narrative. The gamma towards monthly expiration at the current point in time also supports this trajectory. We will continue to monitor the data. But for now, enjoy the immediate term rally towards the CPI release. We will try our best to keep you guys updated.
Thank you, Jack, and this is all for this episode of Market Updates. Don't forget to subscribe whenever you listen, and I hope you enjoy the show.
Thanks, I hope you guys enjoyed it.
Disclaimer:
Nothing contained in the following content constitutes an offer, solicitation, or recommendation regarding any investment management product or service, or the offer to sell or the solicitation of an offer to buy any security; The following content is purely for information only and is based on information available at the time it was created. It does not take your financial situation or goals into consideration, and may not be suited for you.
