• This week was chock full of important data — we got both of the Fed’s mandates in the same week: jobs and inflation.
• The jobs number came in at 181,000 when even the optimistic forecasts were calling for around 60,000.
• The labor market continues to look resilient.
• That said, jobs numbers are often revised — sometimes dramatically — so we don’t want to hang our hat on one data point.
• The bigger picture is that we are not seeing deterioration in the labor market, and that’s important.
• If 70% of our economy is the consumer, and consumers have jobs, they can spend.
• When consumers spend, companies make profits.
• When companies make profits, stock prices tend to do well.
• On the inflation side, we got another in-line reading at 2.4% versus 2.5% expected.
• The Fed’s target is 2%, so we’re not quite there, but we’re also not anywhere near 5% or 8%.
• Despite months of concern about tariffs pushing inflation higher, we still have not seen that pass through in the data.
• Inflation has largely been holding in the 2.4% to 2.8% range for several months.
• So we get strong jobs, controlled inflation… and the market goes down.
• That seems counterintuitive, but the move appears to be driven by weakness in tech and software stocks.
• Software has been punished consistently over the last several months.
• There are growing concerns about how quickly AI will translate into usable services and sustained profit growth.
• Some of the selloff may be warranted, but it also feels like it may be overdone.
• Another factor may be interest rates.
• The market has grown accustomed to lower rates and cheap credit over the last 15 years.
• Strong economic data may mean the Fed keeps rates higher for longer — and the market doesn’t like that.
• In a strange way, good news can delay rate cuts, and that can cause short-term selling pressure.
• Historically, when markets sell off on good news, buyers often step in once emotions cool.
• For now, our Fearless Forecast for the year remains intact.
• We still believe this could be a strong year for markets overall.
• However, big bear markets rarely announce themselves in advance.
• The punch that knocks you out is usually the one you don’t see coming.
• Both the tech crash and the 2008 financial crisis were “out of nowhere” events for most investors.
• That’s why having a protection strategy matters, especially if you are within five years of retirement or in the early years of retirement.
• Growth is important, but protection of principal is even more important.
• Losing half your nest egg late in your working years can delay or derail retirement.
• That’s why we have our Invest and Protect Strategy in place.
• We’re also working behind the scenes on enhancements designed to help us better distinguish between normal pullbacks and potential big, bad bear markets.
• More details on that coming soon.
• For now, the data looks solid, the economy looks resilient, and we remain optimistic, while staying disciplined and prepared.
• As always, our goal is to help you enjoy your Second Childhood Without Parental Supervision without worrying about the markets.

Transcript:

Ken Moraif
Hello everyone, and welcome to our Market Alert video for this week, which is Friday the 13th. Oh my gosh, I am going to stay away from all black cats. So thank you for watching. This is the weekly market alert video where we have more fun than a human being should be allowed to have when talking about all this boring financial stuff, and this week was an amazingly chock full of important data. As you guys may know, the Federal Reserve has two mandates. One is inflation, and the other is jobs. And guess what? We got both of those in the same week. So this was a big, big deal. And so we’re going to talk about that. And so let me bring Jordan Roach into the fray to join me. Our Chief Investment Officer, Jordan, how are you doing?

Jordan Roach
Doing good, always doing well, when we get actually get some meaty stuff to talk about,

Ken Moraif
it’s true. Yeah, you love all that stuff getting into the data. You know, there are different personality types. There’s like the reds, which are people that, you know, they’re just the the project manager get the job done. And then there’s the blues, which is, you the analytics. These are the people that, when they’re using an Excel spreadsheet, they pull out their calculator to validate whether the Excel spreadsheet is right. And then there’s me. I’m a yellow I love to tell stories. So anyway, yeah. And so before we get going, I am in Colorado right now. And so Colorado finally got a lot of snow, so it’s nice. Going to get about 16 inches this week, but I’m only here for three days here, and then we’re leaving,

Jordan Roach
hopefully, right? Ken, hopefully leaving. You’re not gonna get stuck, are you?

Ken Moraif
I don’t know, 17 inches of snow may cause the airplanes not to leave, but I will tell you something that you know, and I’m not vain, okay, the fact that I talk about this stuff every week. Does not mean that I’m vain. I hope nobody takes it that way, but my daughters are all bent out of shape about my hair. And since covid, I actually cut my own hair. And so because, and now because I cut my own hair, it’s like, I can’t justify two hours. You know, you drive down to the hair salon, and then they give you, like, a scalp massage, and they do all this stuff. And I’m like, just cut my hair. And then they’re talking to you, and you’re like, oh my gosh, I don’t want to talk to you. I just want to cut my hair and leave. And then they charge you, you know, $8,000 or whatever it is, to get your hair cut. It’s such a beating, so much money. So therefore I cut my own hair. And my daughters are like, man, it just looks awful. Apparently they don’t like what happened. What’s happening, like, right here, you know, where it kind of sticks out a little bit. But I tell them that my hair grows faster this way than it does that way, so it catches up quickly. That’s a function of age. I’ll tell you. That’s what happens so well, you

Jordan Roach
just need to do what I did for years, is just buzz it. That’s the easiest way to do it.

Ken Moraif
Well, that’s your military background. I don’t know how I would look with a buzzed haircut. You might be all right. So anyway, let’s dive into all this boring financial stuff, and let’s have more fun than a human being should be allowed to have when talking about it. So let’s go in in chronological order. So we got the jobs numbers first, right? And the numbers came in at 181,000 jobs, when the even the optimistic guys out there that were forecasting were saying 60,000 jobs. So it just blew the number out of the water.

Jordan Roach
Yeah, this is one that was interesting. I mean, it caught the whole market. Was, I think, very surprised by this, because they were expecting less than probably half of that number. Even what they’re expecting was a big number relative to what has actually been happening, you know, in the prior month. So this goes into like, yes, good. Maybe the labor market is fairly resilient. But it also goes the thing about, is this real? Like, are we going to get a big revision here? Yeah.

Ken Moraif
I mean, every time you turn around, they revise the numbers, and they revise them in a big way, like for 2025 they revised the numbers down 820,000 jobs. It’s like, Who are these people that are doing this? Can they not do math? I mean, what’s up with that?

Jordan Roach
Yeah, so it does seem good. However, it’s like a wait and see to me. Now, with all jobs, it’s a, let’s just see the sticks.

Ken Moraif
So probably what we should do is not hang our hat on the big number, but hang our hat on, I guess the trend, or, you know, just kind of it tells us that the job market is very healthy in the United States. Yeah, I think that’s

Jordan Roach
an important point. So we don’t want to look at the in want to look at the individual data point, just kind of, we want to see what’s been consistently happening. I think are we kind of broadly, holding tight, moving up? Certainly we want, we want to see any deterioration, and we’re not seeing that. So that’s good, yeah.

Ken Moraif
And 70% of the economy, of our economy, is the consumer, and if. The consumer has a job, then that consumer Americans spend, and if they have a job, they get to spend, and if they spend, companies make profits. And if profits are there, then stock prices do well, in our view. So it’s all very good. So from that standpoint, it’s going to be interesting to see when they revise it, how real these numbers are, yes, but for now, you know, I know the Trump administration is all over it, right? 181,000 jobs, we told you,

Jordan Roach
yeah, that’s exactly right. That’s

Ken Moraif
exactly right. So okay, so then let’s go to the other thing that the Fed looks at, which is inflation. We got those numbers this morning, and ho hum, right? I mean, basically in line, inflation’s actually a little lower than estimate as 2.4% versus 2.5 their target is 2% so, I mean, we’re kind of in the range, right?

Jordan Roach
We’re getting in the range. And so, I mean, again, it’s a good read. You know, you’d say broadly is that, yes, we’re not at 2% but again, and I’ve read a lot of reports on this, where there’s some analysts and trading desks that deal in, like, you know, rate swaps that they’re still doing the Yeah, but wait and see, inflation’s gonna come back higher

at some point. Those darn tariffs, I mean, they’re gonna get, it’s amazing.

Of how many of these reads we have to say, Look, maybe we’re not at two, maybe we’re but we’re not five, we’re not at eight, so we’re okay here.

Ken Moraif
So we’re going, we’re going on, when was Liberation Day? It was in April, right? April, April. Okay, so what is that? Eight and two? So it’s going on like 10 months, and we’ve gotten, I don’t know how many inflation reads since then, and job and the jobs reads, it doesn’t seem like all these people that were fretting over the effects of tariffs are right. It looks like they were all wrong.

Jordan Roach
Yeah. So far, we have not seen that pass through at all to kind of even, we even see a start of a trend higher, back in the wrong way with inflation. I mean, it’s broadly been coming down and then holding in that 2.4 to 2.8 you know, range for six, nine months.

Ken Moraif
So now we’ve got another thing. So therefore, the market goes down. We got really good inflation number. We got a really good jobs number. That is, like, fantastic. What else do you want? Right? The inflation is low. Jobs are good, the economy is strong. Everything looks great. And the market goes down, you know, like, 1.6% and, I mean, it’s like, what the heck is going on? Why does the market go down when we have good news? I mean, what’s up with these people?

Jordan Roach
I think this is Dom. This is a symptom of what has in the last few years has been driving the market higher, right? This is tech stocks. So, yes, it’s all good. It seems all good. But what’s been leading the market. The flavor has been AI, and I think there’s growing concerns on that translating into usable services, usable jobs, increased margin. So the market just gets skittish at times. And I think that’s what’s leading it. They look at all that, they go past and go, Yeah, but what’s tech? What’s tech doing?

Ken Moraif
Yeah, yeah, but it’s the Yeah, but trade Yeah. You know, a good friend of mine is on the board of a software company. Okay? They were, they were talking about going public. They wanted to go public. And you know, with this sell off that we’ve had here in the software stocks, they’ve decided to delay it because their price is so low that they’re even worried that the price is so low that they might be a takeover target. And so, you know, it’s getting rough for the software companies. And he’s like, there is no way AI can replace software, you know, at this point in time, and maybe ever, because it makes too many mistakes. You can’t rely on AI to take away software, but that’s also what’s been selling off, and we’ve been seeing the market go

Jordan Roach
down Absolutely. Just punish, continue it. You know, continual punishment over the last three to six months, all the software side. And I do think it’s interesting where, yes, maybe there could be a changing landscape where AI maybe can do some of that, but in order to replace broad software as we know it, replace Salesforce, that takes a long time, so maybe some of the sell off is warranted, but it seems like this is even a bit much.

Ken Moraif
Yeah, and the other thing also is the Fed and interest rates. So in a weird way, you know, the market just desires. It lusts for lower interest rates. Yeah, it’s like, it’s the market’s heroin. It just wants to inject low interest rates. It wants that heroin in the system. And if you get good numbers on the employ unemployment side or and you get good numbers on the inflation side, then it’s, oh no, the Fed’s not going to lower interest rates now, and I’m not going to get my fix, and I’m going to throw a temper tantrum, and I’m going to sell because I want my fix.

Jordan Roach
You know, that’s important point that we haven’t yet talked about the rates in a bit, is, yes, the market going. Look at this and go, great. Earnings are largely resilient. People are employed, but then the Fed’s going to keep rates higher than where we want them to be. And that didn’t allow me to go get my cheap credit to borrow, to risk up and price and leverage up and all these things that we’ve gotten used to over the last 15 years.

Ken Moraif
Yeah, you know, in my experience, what I’ve seen over the last 30 years is that what happens is that you get the sell off from the people that have the temper tantrum, but then you have all these other people on the sidelines that are going, Wait a minute, we just got good news, those guys are stupid. And so you have, you have a way of buying on the backs of all the people that sold because the people that sold sold because we have good news, and it doesn’t even make sense. So therefore I’m going to go in and buy, you know, all these things that are down because it’s good news. I mean, it’s like, you know, what are these people thinking? So if history holds, we should see some buying coming in after this. So for the time being, it looks like our fearless forecast still looks good. The future looks bright. We think that, you know, the market should do quite well this year, and we’re still looking at that. But the thing always that you have to remember is that, you know, big bad bear markets, big downturns in the market come out of nowhere. You know, I always like to use the example of boxing. You know, my wife told me that if she knew that I was a boxing fan, she would not have married me. She thinks it’s a violent, stupid sport, and she doesn’t, she doesn’t get why two guys wailing on each other, or now women, you know, why anybody finds that to be interesting, but it’s, it’s actually a sport, and there’s a lot of strategy, if you understand what’s going on. But be that as it may, if you look at the knockout punch, it’s always the punch that the guy receiving the punch did not see. You know, the most famous one is, you know, Muhammad Ali and I guess at the time, at the time, Cassius Clay and Sonny Liston, right where he just out of nowhere, there’s this punch, and suddenly Sonny Liston is on the mat, and he’s knocked out. He never saw it. The the punch that you see coming. You know, you watch these in a different boxing match. You watch these two guys wailing on each other for 16 rounds, and they’re a bloody mess. And nobody got knocked out because their punches are so, you know, they see them coming. So we always have to watch out and have a strategy to address what? What if something comes out of left field? Because y, 2k the big stock market crash when it went down 49% and then in 2008 you know, with the credit crisis, both of those, you know, pretty much no one saw those coming. Those were both oh my gosh moments, and then the market just kept on going down and down and down. And that’s what happens in these big, bad bear markets. And so the next one will probably be the same thing. So despite the fact that we think everything looks great and there shouldn’t be any impediment to the market doing really well this year. You know, in our view, especially if you’re within five years of your retirement, or you’re in the first five years of your retirement, that you should have a plan to protect yourself on the downside, which is why I’m so glad we have our invest and protect strategy. And in fact, without without any spoilers, Jordan, can you kind of tell us a little bit about an announcement we’re going to be making probably in about a month or so?

Jordan Roach
Yeah, I think you know, in the next month, hopefully we got to button up a few things here that we’re going to be able to communicate a lot of the hard work we’ve been doing over the last 12 months to further enhance and refine our strategy to hopefully help us discern between the normal bear market potential versus maybe the big bad bear is on the horizon, and just help us make, again, very consistent, deliberate decisions around investments.

Ken Moraif
Yeah, because you know, growth is important, but protection of principle is more important. You know, if you’re if you lose half your money, your retirement is not going to be any fun. And maybe, you know your ability to retire goes away, and now you got to work an extra six years, both of which would not be a good thing. So I hope all of our clients who are watching feel the peace of mind that, yes, we think it’s going to be a very positive year this year, but at the same time, we always have our strategy to help us should things go down. You know, it’s designed to do that, and then also our skippers. And for those of you who don’t know what SCWPerS are, but I you know, for some reason, I got to remind people, SCWPer is the acronym for second childhood without parental supervision. Okay, so that’s that when one of when one of you guys retires, we call you a SCWPer because we want you to go and SCWPer. You know, it’s actually a verb. It’s a noun and a verb, and you should be out there SCWPering your tails off. See you can turn it into all kinds of things. And so have fun. Enjoy. Let us worry about all this. Stuff. Let us get the gray hair for you and cut my own hair, and my daughters don’t like it, and everything else. So things look good right now and but you always have to be cautious and looking out for that punch that you don’t see coming and have a strategy to address it. So ladies and gentlemen, thanks for watching. I hope you had as much fun watching this as we did, producing it for you. We’ll see you next time, same channel, Same Same time, same channel, bye, bye, everybody.

Please note: transcript has been modified after the time of recording. 

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