FYI, for the next few weeks (to year end), I'll be a bit less active, and less voluminous, here on the blog, as I'll be devoting the time normally spent organizing, then articulating, my thoughts for the daily message to what, as usual, will be a several part year-end message (delivered over the final two weeks of the year)..
So, for this morning, just the following graph (H/T BCA Research), followed by my brief assessment, and some critical investment wisdom from the late great Charlie Munger:
Bloomberg's Cameron Crise this morning speaks to what has stocks green at the open:
"When you are a bull, everything looks like a red cape, which kind of explains how the market is likely to interpret this morning’s data. The salient features were a downward revision to the Q3 core inflation index, a downward revision to last quarter’s household spending, and downside surprises to October inventory data (which should produce a downgrade to current-quarter growth estimates.) That all casts a dovish hue on the policy backdrop..."
All of which denotes a slowing economy, which of course is to be expected if the 2024 recession narrative is to play out... In the meantime, as is typical at this stage, confirmation of such, is, ironically, bullish for stocks.
Yes, we've touched on this plenty of late, but, again, per our weekly results update below, the divergence among equity sectors this year has been utterly shocking... And while indeed a serious broadening (the 8 of 11 sectors that are, let's say, not having a magnificent year playing catch up) may be in the offing, history offers up some serious red flags to consider.
Allow me to illustrate.
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Comments made by Hedgeye CEO Keith McCullough in today's Macro Show resonated with me, and has me calling up the following from my video commentary this morning:
"Let's see this for what it is; this is not a time, from these levels and from this stage in the cycle, to expect that the next new raging bull market is about to begin...
Toward the end where I mention jobless claims, I suggested that a weak number would be bullish for stocks (given the present character of the trading), I actually meant that a strong number (denoting a weak labor market) would be bullish... Now, go figure, the number was weaker than expected (denoting a strong labor market) and equity futures didn’t budge... Although, I should add that last week’s number was revised up (weak sign), and Nvidia didn’t whiff yesterday... Hmm...
Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:
