The Scariest Jobs Number, Crude's Slide, 'Crash in Cash'

Is that what that was? Maybe it was just a lack of interest. Honestly, even though I know that by mid-December, some managers, if they do not have a need to chase performance going into year's end, will hunker down. At this point, if they have had a year worth protecting, they will not stick their necks out too far at this point and simply act only to protect themselves. If they work for someone else, they'll protect whatever year-end compensation they think they are due, based on whatever they agreed to in their contracts.

The outperformance that we have become accustomed to for the month of December, that is often spread over the final two weeks of the year, is often further concentrated in the traditional "Santa Claus Rally" period. This period won't even start and often comes only after the traditional clash between those taking losses for tax purposes and those who need to chase performance right up until the end.

On Tuesday, the Bureau of Labor Statistics released its labor market survey results for November along with what October data was available. The Census Bureau released October retail sales as well. Market reaction was mildly negative overall, but it felt like traders and investors either just did not care as much as I had thought they might or simply found something better to do.

Maybe they were pregaming the NY Knicks victory in the NBA Cup final? While I don't count that as a real championship, it is nice to see the Knicks win something, really anything for the first time since the days of Clyde Frazier, who was my favorite player as a child.

About That Data: Yikes

I went into this in depth of readers here on Tuesday afternoon. For those who missed it, some highlights were the lack of the private sector to fully absorb increased supply of labor due to government layoffs. The U.S. economy lost 105,000 jobs in October and then added 64,000 jobs in November. In October, 157,000 government employees lost their jobs, while 52,000 private sector jobs were created. For November, another 5,000 government jobs were lost, while 69,000 private sector jobs were created.

As for the rest of the data, the unemployment rate moved higher in November from 4.4% in September, to 4.6% as participation grew from 62.4% in September to 62.5% in November. 323,000 net individuals apparently came off the sidelines and entered the labor force over those two months.

More terrifying is this: The number of people working part-time for economic reasons increased by 909,000 persons since September, while the number of people working part-time for non-economic reasons increased by 370,000. That's 1.279 million new part-time jobs, despite net job creation of just 96,000 positions.

What does that mean? Almost 1.1 million people likely lost full-time jobs as their employers cut hours, reducing these employees to part-time status. That took the underemployment rate (U-6 unemployment), all the way from an even 8% in September to an alarming 8.7% in November. That's the single most horrific number in this whole release.

This negates the increase in the average workweek from 34.2 hours to 34.3, as part-timers are not included in that data. Wage growth disappointed as well. Average hourly earnings printed flat from July at year over year growth of just 3.5%. That was down from growth of 3.7% in October and 3.8% for September. Don't be taking your day job for granted, gang.

Crude Crash ...

The most interesting thing, I think, that happened across the universe of financial markets on Tuesday came not from our beloved equity marketplace, nor from the bond market, nor from cryptos that have slipped back into the gutter overnight. The most interesting take-away from the Tuesday trade was the collapse of oil prices.

NYMEX WTI Crude prices slipped to a rough $55 per barrel on Tuesday, marking a 2025 low. In fact, those were the lowest prices for the sweet stuff since early 2021. That certainly will help the fight against inflation, reducing overhead for any number of businesses, while extending lower prices for consumers who drive vehicles with internal combustion engines and heat their homes with oil as the Northeast and Midwest move into their winter seasons.

That said, Crude has rallied somewhat overnight as Brent rallied off of its April low, which now has to be seen as support. Something tells me that the fight over oil at these price levels is far from over.

Equities

As for the major U.S. equity indexes, the S&P 500 posted a loss of 0.24% for the Tuesday session as the Nasdaq Composite gained 0.23%, avoiding a fourth consecutive red candle session. Looking at the near majors, the Dow Industrials surrendered 0.62% for the day, as the Nasdaq 100 added 0.26%. The small caps were the day's underperformers as the S&P 600 and Russell 2000 gave up 0.72% and 0.45% respectively.

Moving on to market breadth, only three of the 11 S&P sector SPDRs closed out Tuesday on the green, led by Technology  (XLK)  as both "growth" sectors finished with gains. Energy  (XLE) , for obvious reasons, was the big loser for the day, as defensive sectors struggled as well. Health Care  (XLV)  had a rough day as well.

Losers beat winners by a rough 13-to-eight margin at the NYSE and by something closer to five to four at the Nasdaq. Advancing volume took just a 32.3% share of composite NYSE-listed trade, but a far more impressive 54.25 share of composite Nasdaq-listed activity. As for aggregate trading volume, activity was up by less than a smidgen from Monday across NYSE-listings but fell off sharply (-10.3%) across Nasdaq-listings. Volume was also up small across the membership of the S&P 500. It probably should be noted that S&P 500 trading volume has reached its own 50-day simple moving average exactly once since Nov. 24.

That Ain't Good

The Bank of America's Global Fund manager survey showed a "crash in cash" as the firm's Michael Hartnett described it in a note to clients. According to the survey, cash positions dropped to a 3.3% share of portfolio allocation in December from 3.7%. Once the cash is gone, the only way to buy something is to sell something, or to borrow against one's assets. Oh joy.

All She Wrote on Funding ACA Subsidies? 

Seems like it. Maybe not. On Tuesday, Speaker Mike Johnson said that there would be no vote this week on extending pandemic-era subsidies that reduce the cost of health insurance for those reliant upon the Affordable Care Act (Obamacare). Those increased subsidies expire at year's end, and the House will not be in session next week.

The only way to get the House to vote again on extending these subsidies is to do so through a discharge petition. If at least 218 representatives sign the petition there would be a vote. Republican reps Brian Fitzpatrick of Pennsylvania and Josh Gottheimer of New Jersey have pushed for such a petition without gaining much traction.

Minority leader Hakeem Jeffries of New York already has his own petition going as well. The Jeffries petition already has 218 signatures, all from democrats. That means Jeffries only needs four republicans to cross the aisle and it would appear that at least adding the two names above would be a sure thing.

Warner Bros. Discovery Bid

It would appear that the Warner Bros. Discovery  (WBD)  board of directors will reject the hostile bid for the entire company made by Paramount Skydance  (PSKY)  and will urge shareholders to do the same. The Board sees the Netflix  (NFLX)  bid for most of the company as the more valuable offer.

One would have to think that the recent collapse in the share price and market cap of Oracle  (ORCL)  likely matters here as the Ellison family had guaranteed at least a portion of the potential deal. It also does not help that Jared Kushner's private equity firm, Affinity Partners, is no longer interested in participating in the Paramount bid. Oracle Is down 16.3% since its recent high on Dec. 10 and down 45.4% from its 2025 high in mid-September.

Economics 

(All Times Eastern)

07:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.33%.

07:00 - MBA Mortgage Applications (Weekly): Last 4.8% w/w.

10:30 - Oil Inventories (Weekly): Last -1.812M.

10:30 - Gasoline Stocks (Weekly): Last +6.397M.

1:00 p.m. - Twenty-Year Bond Auction: $13B.

The Fed 

(All Times Eastern)

08:15 - Speaker: Reserve Board Gov. Christopher Waller.

09:05 - Speaker: New York Fed Pres. John Williams.

12:30  p.m. - Speaker: Atlanta Fed Pres. Raphael Bostic.

Today's Earnings Highlights 

(Consensus EPS Expectations)

Before the Open:  (GIS)  (1.02),  (JBL)  (2.72),  (TTC)  (.88)

After the Close:  (MU)  (3.91

At the time of publication, Guilfoyle had no position in any security mentioned.