Tuesday, January 18, 2022

Morning Note: Ill-informed Solace on the Horizon

The meat of this morning's note comes from our internal market log:

1/16/2022

The year has begun with quite the selloff in fixed income. The Bloomberg long treasury index fell 4.3% in the first two weeks, after being down 4.65% for all of 2021.

Friday, January 14, 2022

Macro Update: Conditions Wane Amid Inflation's Gain (video)

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:


Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: "Inflation's a Feature, Not a Bug"

Well, barring something special to the upside in today's session, US equities look to be finishing the first two weeks of the year in the red. Notably so for the indices sporting significant tech sector exposure.

Thursday, January 13, 2022

Good (Global) News Around Covid and The Commodities Setup

From BCA Research's latest commentary on Covid and the overall commodities setup:

"This week, the UK's Office for National Statistics (ONS) reported ~ 95% of England's population tested positive for antibodies to COVID-19 via infection or vaccination in the week beginning 29 November 2021. Similar results were reported for Scotland, Wales and Northern Ireland. This is generally observed in all age cohorts tracked by ONS.

Wednesday, January 12, 2022

Morning Note and A Technical Dollar and Equities Update (video)

For this morning we'll just update the overnight and morning numbers and then jump to a video I recorded yesterday evening.

The first half takes you into the US dollar weeds a bit, the remainder focuses on equities and general observations around our longer-term thesis. Clients, please hang in till the end if you can 😎.


Asian equities leaned green overnight, with all but 3 of the markets we track closing higher. Although Japan and China saw drawdowns at and exceeding 1%.

Europe's mostly higher so far this morning, with 14 of the 19 bourses we follow trading up as I type.

US major averages are all higher to start the day: Dow up 115 points (0.32%), SP500 up 0.26%, SP500 Equal Weight up 0.41%, Nasdaq 100 up 0.37%, Nasdaq Comp up 0.41%, Russell 2000 up 0.68%. 

The VIX sits at 17.73, up 0.62%.

Oil futures are up 0.10%, gold's down 0.53%, silver's down 0.33%, copper futures are down 0.78% and the ag complex is down 0.13%.

The 10-year treasury is down (yield up) and the dollar is down 0.18%.

Led by Viacom/CBS, semiconductor stocks, ALB (lithium miner), solar stocks and banks -- but dragged by Nokia, uranium miners, healthcare stocks, MP (rare earth miner) and gold -- our core portfolio is up 0.13% to start the day.


Technical Dollar and Equities Update

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:


Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

A Quote For the Times

 From Bloomberg today:  emphasis mine...

"Federal Reserve Bank of Cleveland President Loretta Mester said the central bank should shrink its balance sheet as fast as it can without disrupting financial markets and repeated her backing to a March interest-rate increase.

“The case is very compelling that we remove accommodation,” Mester, who votes on the rate-setting Federal Open Market Committee this year, said during a Wall Street Journal Live event streamed on Twitter Wednesday."

"“The economy’s in a much stronger place than it was when we started doing the reductions last time.” said Mester, answering a question on how quickly she favored shrinking the balance sheet. “Frankly I would like to reduce it as fast as we can conditional on it not being disruptive to the functioning of the
financial markets.”"

Well, it would sure be nice if they could have it both ways! I.e., quell inflation that they are in no small part responsible for creating, while doing so without piercing financial market bubbles that they are in huge part responsible for creating. 

Now, to be fair, she did say "the functioning of" financial markets. One might stretch and construe that as her referring to, say, the fluidity of the credit markets.

Well... on second thought... No! 

Should markets crack as the Fed tightens, we'll no-doubt see them pivot back to an uber-dovish stance. Question being, simply, how wide will the crack have to get before they step back in? The tougher question being, will indeed they be able to catch what could be a rapidly falling knife (as they did in 2020) the next go-round?

Morning Note: Not Sure the Renter Would Agree!! -- And -- If Only

While we fully expect the rate of inflation to cool a bit over the coming months, we're not there yet. This morning's CPI data, however, while a tad higher than consensus expectations, were (based on initial reaction) a bit better than equity markets had feared.