Sycamore's Mark Okada: Labor data is starting to concern me

Market Overview - Some firms suggest bonds might be a better investment than stocks in August and September [1] - The market is underappreciating the impact of trade policy, even if it's "less bad" [2] - Signal to noise ratio in the market is currently very high, making it difficult to discern clear trends [5] - Credit markets are being pulled along by equity markets and not leading [9] Trade and Tariffs - Trade deals, specifically tariff deals, are being finalized, but the outcomes are not particularly positive [2] - A potential 40% tariff deal with China is not considered beneficial for growth or consumption [2] - $350 billion of tariff revenue will ultimately come from consumers [3] - The market may be too complacent about the long-term impact of tariffs [4] Labor Market and Economy - Underlying data suggests some weakening in the labor market, with negative revisions averaging 75,000 jobs per month [7] - The Fed might consider a rate cut as insurance against global disruptions caused by trade policies, potentially a "bearish rate cut" [13][14] Credit Market - Credit signals had previously flashed yellow, indicating some concern, but have since calmed down [8] - CLO (Collateralized Loan Obligation) market issuance is up 30-50% year-to-date compared to long-term averages [10] - The market is starting to feel like a more defensive position is warranted [11]