Stock market has historically viewed soft employment data as positive (because it suggests rate cuts) and bond markets today are responding positively to weak jobs data with falling Treasury yields and rising gold/silver prices, but this historical pattern of rate cuts supporting stocks during recessions has broken down during major bubble bursts (tech 2000-2002, housing 2007-2009) when stock markets fell 50%+ despite aggressive Fed easing.

European Central Bank cut rates last month while simultaneously raising inflation projections, and subsequent Eurozone inflation data showed inflation rebounding upward, serving as cautionary tale that cutting rates prematurely to rescue markets may reignite inflation pressures before deflation is confirmed.

New Harbor Financial is maintaining approximately 40% equity allocation for most client accounts but has added out-of-the-money put options as tail risk hedge covering 15% of equity exposure with strike price about 5.5% below current market (S&P 500 at 5200) for approximately $120 cost per $50,000 of equity, using the benefits of currently low VIX to purchase inexpensive insurance.

Market internals (percentage of stocks above moving averages, bullish percent, stocks trading above trend lines) have deteriorated significantly from the blistering rally of fall 2023, showing narrow participation in market highs and deteriorating breadth despite S&P 500 making new highs, which is traditionally concerning for market that looks heavy under valuation weight.

Consumer concerns about job security are rising even among employed people who have not yet lost jobs, suggesting job loss concerns are leading indicator that may precede actual unemployment increases—real anxiety about labor market is developing in advance of official data fully capturing deterioration.

Most people surveyed (Transunion) worry about inflation, interest rates, and housing prices; relatively few worry about recession or stock market; these consumer survey results suggest contrary indicators are in place (low worry about stock market at all-time highs is typical of 'slope of hope' market rallies that precede crashes).