When the investing environment is potentially undergoing a major trend change, investors find themselves deciding if good news is good or bad, and if bad news is bad or good. The current major trend change encompassing the investing environment is the rise in interest rates; and the good news/bad news event was the February nonfarm payrolls report.

This edition features the future of networking; European food delivery; online education; and notes from GE, Costco, and Snowflake.

The U.S. economy added 379,000 jobs in January, ahead of expectations. The unemployment rate dropped to 6.2%. Most of the job gains occurred in leisure and hospitality, with smaller gains in temporary help services, healthcare and social assistance, retail trade, and manufacturing. Employment declined in state and local government, education, construction, and mining. The labor market continues to reflect the impact of the pandemic, as the shape and character of the workforce is changing. In February, 22.7% of employed persons teleworked because of the pandemic, up from 21.8% in November; this trend is likely to remain intact through 2021. The current number of jobs is 8.7 million lower than the February 2020 level. The civilian labor force is down 4.5 million from last February, as these workers have given up on finding jobs. On Thursday, the Labor Department reported that another 745,000 people filed initial unemployment claims, and the total of continuous claims was 4.4 million, down from 4.9 million a month ago. The data indicates that the employment environment, while improving, is still under stress -- a point Fed Chairman Powell made in a press appearance Thursday. We expect the unemployment rate will remain high, and the Federal Reserve will keep interest rates low, into 2022.

Vaccine Optimism: Our Monthly Survey of the Economy, Interest Rates, and Markets

Our bond/stock asset-allocation model is rendering stocks overvalued against bonds, as interest rates have headed higher. Our model takes into account current levels and forecasts of bond yields, inflation, stock prices, GDP and corporate earnings. The model output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest 0.18 sigma premium for stocks, with a standard deviation of 1.0. The current valuation level is 0.6 sigma premium for stocks, still within one standard deviation of normal. Generally, the model has done a good job of highlighting value. For example, stocks were very attractive compared to bonds in the late 1970s, when benchmark Treasury rates were in the high teens before heading consistently lower over recent decades. The model indicated that stocks were at a sharp premium to fair value prior to the "dot-com" crash of 2001 and also at a premium prior to the Great Recession in 2007-2009. Starting in 2009, the model favored stocks -- another good call. As our chart shows, the market can manage with premiums and discounts for an extended period of time. Equity valuations will likely start to improve once corporate earnings begin to rebound.

The Labor Department's nonfarm payrolls report for February 2021 will be released at 8:30 a.m. ET on Friday, March 5, 2021. The headlines on the jobs front have started to brighten a bit in recent weeks, as COVID-19 vaccines have been distributed and administered. Still, the move back to full employment is slow. Last month, employers added jobs (an admittedly low 49,000) and the unemployment rate dropped from 6.7% to 6.3% (but that was because workers left the workforce). Drilling deeper into the data, we note that the rate of chronic underemployment (i.e., also counting part-time workers who want full-time jobs, or workers who have been out of work for at least six months) is 11.1% -- well above the five-year average of 9.4% and the sub-7% rate that prevailed at the end of 2019. We look for the jobs data to improve in the months ahead. Last week, unemployment claims fell sharply, to 730,000 from 841,000 in the prior week. Our forecast calls for modest 100,000 growth in payrolls for February. We actually look for the unemployment rate to tick higher, back toward 6.5%, as vaccine developments bring workers back to the workforce in search of jobs.

As recently detailed by Argus Director of Research Jim Kelleher, CFA, the stock market is not in freefall. Pullbacks and corrections are commonplace, and the current stock-market action feels more like a 'valuation rewind' than the beginning of a bear market. Insider sentiment pretty much aligns with that theory.

The stock market dropped last week, as surging bond yields signaled tighter lending conditions may lie ahead. Tech stocks were the hardest hit and the Nasdaq recorded its worst week since October-though blue chips certainly weren't spared. During Friday's session, the Dow Jones Industrial Average fell 470 points, or 1.50%. The S&P 500 was down 0.48%, and the Nasdaq Composite increased 0.56%. For the week, the DJIA dropped 562 points, or 1.78%, the S&P 500 was down 2.45%, and the Nasdaq Composite was down 4.92%. For the year-to-date, the DJIA is up 1.06%, the S&P 500 is up 1.47%, and the Nasdaq Composite is up 2.36%.

Stocks fluctuated on Friday morning amid continued inflation concerns, a day after Thursday's sharp selloff. The Commerce Department reported that consumer spending rose 2.4% in January after declining in December, helped by government pandemic relief checks and a reduction in new coronavirus cases. The Dow fell 1.0%, the S&P fell 0.1%, and the Nasdaq rose 0.6%. Crude oil traded near $62 per barrel, while gold fell $44 to $1731 per ounce.

Vickers Stock Research, a subsidiary of Argus Research Group, tracks and analyzes insider trading and institutional ownership trends. Form 13-Fs are due 45 days after the end of calendar quarters, and are now coming in from 4Q20. We review the 13Fs of the major activist investors, including Carl Icahn, Trian Fund Management, Jana Partners, and ValueAct Holdings, among others. Activist investing has evolved and is now less about generating a short-term return on an underpriced stock and more about achieving long-term returns through an active management/investor partnership. Here are some recent new purchases and key holdings of activist investors, according to Vickers.

We have highlighted (repeatedly) the current strong market breadth, even suggesting it might be too strong and in need of a reset. We've also talked about extremely overheated market sentiment, also in need of a nice reset as we see it.