A pre-weekend rant- Can we look at the big picture?

By Stephen Rosen on October 8, 2021

I began my day with my normal routine. Alarm goes off at 6:55am, I check my phone to make sure no one needs me bright and early, check the world news, look at the market futures to see how the day will start, and then take my daughter to school (this one hopefully ends in two weeks when she gets her license). But before I left for school, I found myself wondering, why do I even bother checking the futures? Of course it’s good to have some idea of how the markets might open, but what does that really tell me?
I turned on CNBC to check in. Since I am traditionally a big picture person when it comes to investing and portfolio management, I am not typically concerned with what the “talking heads” have to say on any given day, but it dawned on me, I may be in the minority. But, today was “jobs day.” The time of month where we receive the results of the previous months jobs data which includes: jobs gained/lost, participation rate, unemployment rate, and wage growth. For the better part of 15 minutes (at which point I turned it off and started to write this), I listened to various commentators dissect this report in an effort to educate us. Here is the problem–today’s report includes recent results and re-statements of the prior two months, which highlighted that those initial results were not accurate. For example, August’s report initially showed gains of 235,000 new jobs, yet today’s revision showed a gain of 366,000. Now these are still way off from August “projections” of 720,000 new jobs (clearly there are issues with the predications when they are off by such a wide margin,) but if we are looking at a 50% increase from the previous report number, why should we spend so much time analyzing a report that will likely be proven wrong in 30 days?
Bottom line, this is what we know. We are still feeling the impact of the pandemic on a multitude of levels. There are labor shortages everywhere for various reasons. We see it at restaurants we visit, stores we shop in, and call centers that we dial into, just to name a few. Prices are increasing everywhere causing “inflation.” Twelve months ago you could fly anywhere you wanted (minus travel restrictions) for a few hundred dollars, now those prices have begun to normalize and are double or triple what they were. Twelve months ago, restaurants were offering family meal plans for take-out so they could stay afloat, now they have Covid surcharges and in many cases mandatory 20% gratuities. Hotels rates are double. Everything is more expensive today and will be for the foreseeable future.
Inflation exists, but it’s not as high as previously estimated. Why? The Delta variant is slowing down the pace of the growth in economy and therefore the feared, massive inflationary pressures have subsided. What will this result in? A slower recovery of jobs and a longer, more drawn out, but more moderate level of inflation. This will cause the pundits who said inflation will be here to stay, and be more of a problem, to claim victory, and scream for the Fed to raise rates and caution that markets are due to correct 20% in the next 90 days. Here’s the reality… if my hotel room that cost $800 pre-pandemic (and went to $250 during the pandemic) is $900 four years later, we are looking at a 3% inflation over time. This math leads me to ask, why are we focused on the 360% increase from the pandemic level? I assume it makes for a catchier headline.
Enjoy your weekend and please remember, the news today will probably not matter to the markets in a week. A wise mentor of my son’s impressed an important lesson on him that my family repeats regularly. Always remember that you can only “control the controllables.” Point being, don’t hyper-focus on the things that are out of your control and invest your energy in the areas that you can impact. If the pandemic has taught us anything, it’s to enjoy our friends, family, and the world around us. Have a nice weekend and turn off the talking heads.

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