The Conventional View

 6/6/26

From the Weekend WSJ 

Kevin Marsh Job Just Got More Complicated

Kevin Warsh has been Federal Reserve chairman for two weeks. The bond market and the White House have already picked his first fight for him.

Friday’s strong jobs report pushed traders to raise bets on a rate increase by year-end, drew a public warning from a Fed voter that higher rates could be warranted this summer, and prompted one Wall Street bank to forecast a series of hikes beginning in December.

Meanwhile, President Trump reiterated his longstanding frustration that investors treat strong economic data as unwelcome news because they expect the Fed to respond by raising rates. “With a great Jobs Report, like just announced, stocks should go up, not down,” he posted on social media Friday. “Growth does not mean inflation!”

Stocks sold off, with the Nasdaq down more than 4%. In the current environment, good economic news pushes bond yields higher, and higher yields punish stock prices. Yields rose Friday because investors anticipated some combination of a Fed that raises rates, more persistent price pressures, or both.

Trump’s top economist—himself a finalist for the Fed job that went instead to Warsh—went on television to argue the report showed the Fed could be cutting rates before too long.

The whipsaw illustrates the high degree of difficulty facing Warsh as he heads into his debut meeting as chairman this month. He looked poised to inherit a much different economy when Trump tapped him in January.

 The Jobs Report

 U.S. employers added 172,000 jobs in May, and reports from the previous two months were revised up to show a gain of 93,000 more jobs than previously estimated, the Labor Department said Friday.

 From the Weekend WSJ

Fears of rising interest rates collided with worries about artificial-intelligence spending on Wall Street Friday, bringing an abrupt and painful end to weeks of gains and sending the Nasdaq composite to its worst day in more than a year. 

 Stocks, bonds, oil, gold and bitcoin all tumbled. The tech-heavy Nasdaq fell 4.2%—more than 1,100 points—in its worst decline since the tariff rout of April 2025. Micron Technology, Intel, Super Micro Computer and Sandisk lost more than 11%. Cisco and Nvidia both dropped more than 6%. Equipment maker Caterpillar, lately an AI play because of its power and energy business, fell 3.8%. 

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 The media constantly attempts to link some fundamental event with what happennd in the market on a particular day. You never read a comment like this, courtesy of your author

Bond prices fell as interest rates rose as a result of the continuing 39 year interest rate cycle. The Cycle bottom in March 2020, 39 years from its top in 1981. Cycles in markets are as inevitable as cycles in weather. No one questions the four seasons but let thr markets collapse in one day amid what was wide spread optimism, and all are searching for a fundamental reason.

For stocks, how about the idea that the Elliott Wave Pattern at multiple degrees of trend had finally topped in all major stock indexes (it did). And so the mood towards semi-conductors changed and stocks sold off.

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and here is the 39 year interest rate cycle to prove my point. note the arrow pointing up, this charts does not go back to 1942 but one can see its uptend from  1966. 

 Conclusion, charts at various degrees of trend show a concluding five waves up in sotcks.

Interest rates have resume a long term upward cycle.With world governments supporting trillions of dollars of debt, now estimated a $111 T,now wonder bond holders are nervous about repayment now demanding more return for holding the debt. 

 See the AI description of teh 55% 1973-74 decline, add widespread media dislike of the President and it sounds pretty familiar, eh?

 

To identify when stocks peaked in 1973, consider the following points:

• The stock market reached its peak on January 11, 1973.
• The Dow Jones Industrial Average hit 1,052.77 points on that date.
• This peak was part of a broader market trend leading to a significant downturn.
• The market decline continued throughout 1973 and into 1974.
• Economic factors included rising inflation and an oil crisis impacting investor confidence.