Wednesday, November 25, 2020
As I've suggested herein of late, it's not a stretch to surmise that the near-term path of least resistance for the stock market is most likely higher (not a prediction mind you!).
Asian stocks were mixed overnight, with 9 of the 16 markets we track closing lower. Same for Europe this morning, with 9 of the 19 bourses we follow currently in red. U.S. major averages, save for the Nasdaq, are giving a little back so far this session; Dow down 176 points (0.58%), S&P 500 down 0.27%, Nasdaq up 0.13%, Russell 2000 down 0.53%.
Tuesday, November 24, 2020
Monday, November 23, 2020
Optimism pretty much reigns globally this morning, as positive news on Astrazeneca's vaccine added to recent promising reports from Pfizer and Moderna, and the readings from purchasing manager surveys (PMIs) say business, particularly among global manufacturers, is picking up notably, as are costs, per our view on inflation going forward.
Friday, November 20, 2020
I've been hinting that many of what we deem to be pertinent data points have been flashing threatening signals of late. However, per this week's analysis, not yet to the point that has us lowering their scores.
In fact, thanks to an uptick in mortgage purchase applications (our only needle-mover this week), our overall score moved yet another notch closer to the green; this week we're at -4.08.
Thursday, November 19, 2020
So, a little bit ago I stuck my head in the fridge and saw this can labeled "Starbucks Doubleshot Energy" and, well, the following happened.
Read at your leisure... 😎
Regular readers may have noticed that I've warmed a bit more lately to the notion that there may very well be some upside left in stocks from here (of course, particularly short-term, one never knows). And that's despite the reality that 20 million Americans remain on some form of unemployment assistance, that we're operating amid a corporate debt bubble that is not only the largest in history, but its credit quality in the aggregate is, well, horrendous; some $1.4 trillion of corporate debt literally sits on the balance sheets of insolvent companies yet to implode, and, well, there's more (read this week's main message), but you get the gist.
Asian stocks traded mostly higher overnight, with 10 of the 16 markets we track closing in the green. Europe's nearly across-the-board weak this morning, with all but 2 of the bourses we track in the red. U.S. major averages are mixed: Dow down 45 points (-0.15%), S&P 500 flat, +0.02%, Nasdaq up 0.55%, Russell 2000 down 0.21%.
Wednesday, November 18, 2020
Asian equities traded mostly positive overnight, with 11 of the 26 markets we track closing in the green. Europe is beginning the day in opposite fashion vs yesterday (all but 2 bourses were down), with all but one of the 19 bourses we track trading nicely higher. U.S. major averages are a bit mixed this morning: Dow up 96 points (0.32%), S&P 500 up 0.14%, Nasdaq down 0.11%, Russell 2000 up 0.39%.
Tuesday, November 17, 2020
While our present view of probabilities going forward has us exploiting what we believe to be truly viable opportunities, we recognize the uniqueness, and immense challenge inherent in what's about to unfold. And we do not envy the new investor who is just now entering the fray, with uber-high expectations.
As I've suggested lately herein, I'm leaning toward the rising inflation camp as we move firmly into 2021. Which is a position at odds with that of a number of economists/macro thinkers whom I have great respect for.
Asian equities fared okay overnight, with 12 of the 16 markets we track closing modestly in the green. Europe, on the other hand, is in a sour mood this morning; all but 2 of the 19 bourses we track are trading lower as I type. U.S. Major averages are taking a breather this morning as well: Dow down 316 points (-1.06%), S&P 500 down 0.77%, Nasdaq down 0.34%, Russell 2000 down 1.47%.
Monday, November 16, 2020
In last Monday's morning note we put numbers to an impressive rally on the back of news that Pfizer's covid vaccine was looking to be hugely (90%) effective. And here we are, one week later, and reports from Moderna suggest the same for theirs (94% effective!).
Saturday, November 14, 2020
In yesterday's morning note I shared the following from my recent entry to our internal research thread:
Friday, November 13, 2020
Asian equities traded in mixed fashion overnight, with half of the 16 markets we track closing higher, half lower. Europe, holding up against rising covid numbers and faltering Brexit trade talks, is seeing 12 of its 19 bourses we follow in the green so far this morning. U.S. major averages are holding up against the same in terms of covid, and appear unconcerned over the domestic political backdrop: Dow up 198 (0.68%), S&P 500 up 0.69%, Nasdaq up 0.39%, Russell 2000 up 1.78%.
Thursday, November 12, 2020
Asian stocks took a breather last night from what's been an impressive rally of late; 12 of the 16 markets we track closed in the red. Europe's giving some back this morning as well, with 14 of the 19 bourses we follow trading lower. U.S. major averages, save for the Nasdaq, are not feeling it either: Dow down 149 points (0.51%), S&P 500 down 0.30%, Nasdaq up 0.27%, Russell 2000 down 0.55%.
Wednesday, November 11, 2020
Asian equities on-balance continued their winning streak overnight, with 11 of the 16 markets we track closing in the green. Europe's once again in the green as well, with 17 of the 19 bourses we track trading higher, as I type. U.S. major averages, however, are mixed: Dow down 45 points (0.15%), S&P 500 up 0.46%, Nasdaq up 1.38%, Russell 2000 down 0.72%.
Tuesday, November 10, 2020
Asian equities put in another positive performance overnight, with 13 of the 16 markets we track closing higher. Europe's following suit this morning, with 16 of the 19 bourses we follow in the green thus far. U.S. major averages, on the other hand, are all over the place: Dow up 77 points (0.27%), S&P 500 down 0.65%, Nasdaq down 1.93%, Russell 2000 up 0.11%.
Monday, November 9, 2020
I thought the following section of an email conversation with a savvy friend and long-time client on Sunday would be instructive for our readers. It was in response to his feedback regarding a superb essay that I discovered over the weekend and excerpted from -- in response to my friend's emailed question/comment regarding Saturday's blog post -- to emphasize much of what I've been writing about over the past year+.
I'll add parenthetic clarity where I think it's needed. I'll also add emphasis where my comments relate to today's rally.
Speaking of today's rally; while the Dow closed up over 800 points (2.95%), the S&P 500 managed only a 1.17% gain, while the Nasdaq Composite actually closed down 1.53%. Our core allocation closed up 1.21%:
Vaccine optimism has global stocks screaming higher this morning. Pfizer's vaccine, in a large study, reportedly prevented 90% of infections. Cause for celebration (or at least great anticipation), for obviously much more than investment purposes!
Saturday, November 7, 2020
Friday, November 6, 2020
The Bureau of Labor Statistics (BLS) October jobs report (released this morning) looks markedly better than this week's ADP report (mentioned in yesterday's morning note). Nonfarm payrolls increased by 638k vs 580k estimated. Permanent jobs losses remain at 3.7 million (among the 20 million still without work), but "remain" is the operative word. I.e., the number came in flat in October after major increases over the previous two months. More on this to come in this week's macro update.
Thursday, November 5, 2020
Wednesday, November 4, 2020
In today's video commentary I illustrate the messy internals in today's equity market rally, reflecting a shift in election expectations, I make the case for commodities and I briefly touch on a handful of our weekly analyses.
IF VIEWING FROM YOUR MOBILE PHONE, CLICK "VIEW WEB VERSION" AT THE BOTTOM OF YOUR SCREEN.
Tuesday, November 3, 2020
If you're looking for something pithy and provocative on the election this morning, well, you won't find it here. And if you're baffled by this morning's 580-point Dow rally, I hear ya. That said, if all I knew at the moment was that the dollar was down 0.74% (that's big), I'd say, given the present setup, and where the dollar -- and stocks -- have been of late, a big stock market rally today is a no brainer.
Could it be that "the market" is already looking past the election? Perhaps, but a 35 VIX (pricing of volatility in SP500 options) says that traders, despite this week's rally, are hugely on edge. Let's hope it's not a Wile E. Coyote sort of edge, if you know what I mean.
Monday, November 2, 2020
Saturday, October 31, 2020
SPECIFICALLY FOR CLIENTS: Here's our latest positioning update where I illustrate the whys and wherefores of the adjustments we've made since mid-year, including how we're currently handling our cash/fixed income exposure, as well as why we're about to re-establish a modest position in AT&T.
Note: Where I make reference to a sector that has "performed well" this year, I'm speaking on a relative basis (coming off of the March low); 7 of the 11 primary U.S. equity sectors remain notably in the red on the year; as do 41 of the 47 foreign equity indices we formally track.
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:
Friday, October 30, 2020
Taking a break from this morning's macro grind, I thought I'd share this short back and forth between myself and Nick in our firm's chatroom a little while ago:
Asian equities, save for Vietnam's, took a bath overnight, with all but 1 of the 16 markets we track closing in the red. Europe, on the other hand, is showing a little strength this morning, with 10 of the 19 bourses we follow trading higher. U.S. major averages look more like Asia did last night so far this morning: Dow down 179 points (-0.67%), S&P 500 down -0.90%, Nasdaq down -1.57%, Russell 2000 down -1.07%.
Thursday, October 29, 2020
Just in the course of my morning routine of perusing overnight and early morning data and developments, the Dow went from up mid-double digits (surrendering a 300+ rally in futures trading last night) to down 220 points to up 155 as I type. I would tell you to buckle up, but you're not trading this noise, right? Say "right."
Wednesday, October 28, 2020
Tuesday, October 27, 2020
Asian equities closed mostly lower overnight (but not bad considering yesterday's rout in U.S. markets), with 10 of the 16 markets we track in the red. Europe's definitely having a rough go of it, with 16 of the 19 bourses we follow currently trading lower. U.S. stocks are struggling to find direction this morning: Dow down 110 points (-0.40%), S&P 500 down -0.15%, Nasdaq up 0.37%, Russell 2000 down -0.42%.
Monday, October 26, 2020
Asian equities leaned lower overnight, with 10 of the 16 markets we track closing in the red. Constructive Brexit headlines can't overcome a notable spike in Covid-19 cases across Europe, with all 19 bourses we track currently trading lower. Stalling stimulus talks and higher Covid numbers has the dollar rising and U.S. stocks falling so far this morning: Dow down -652 points (-2.35%), S&P 500 down -1.98%, Nasdaq down -1.51%, Russell 2000 down -2.64%.
Friday, October 23, 2020
Asian equities traded mostly higher overnight, with 11 of the 16 markets we track closing in the green. European markets are liking the news out of their auto sector, plus I suspect optimism around Brexit isn't hurting either, as 16 of the 19 bourses we follow are in the green as I type. U.S. stocks are searching for direction this morning as disappointing earnings reports from chip makers has tech trading a bit lower: Dow up 28 points (0.10%), S&P 500 up 0.13%, Nasdaq down -0.35%, Russell 2000 up 0.17%.
Thursday, October 22, 2020
Wednesday, October 21, 2020
I'm taking this week's main message from an entry to our internal log that I penned last weekend (adapted/edited to be featured herein).
Asian equities traded mostly higher overnight, with 10 of the 16 markets we track closing in the green. While the pound and the euro are loving the positive Brexit (talks) news this morning, European equities aren't feeling it; 17 of the 19 bourses we follow are trading lower as I type. US major averages (save for the Russell) were initially liking the sound of a 48-hour deadline (call it an extension) to get another trillion or three of much needed "stimulus" (call it "support") approved; at the moment, however, not so much: Dow down -48 points (-0.17%), S&P 500 down -0.09%, Nasdaq down -0.07%, Russell 2000 down -0.87%.
Tuesday, October 20, 2020
Asian equities traded mostly higher overnight, with 10 of the 16 markets we track closing in the green. Europe's doing well as well, with 13 of the 19 bourses we track up as I type. U.S. major averages are reflecting newfound optimism that a stimulus deal will happen by the end of the day (decent [but not guaranteed] bet I suspect): Dow up 206 points (0.73%), S&P 500 up 0.70%, Nasdaq up 0.42%, Russell 2000 up 0.26%.
Monday, October 19, 2020
Asian stocks traded mostly higher overnight, with 12 of the 16 markets we track closing in the green. Europe, not so much this morning; 11 of the 19 indexes we follow are trading lower as I type. The U.S. major averages, trading on virtually nothing (for the moment) but the prospects for fiscal stimulus, have been all over the place as today's session gets underway. At the moment: Dow down 24 points (-0.06%), S&P 500 down -0.13%, Nasdaq down -0.25%, Russell 2000 up 0.44%.
Sunday, October 18, 2020
Saturday, October 17, 2020
“The word unprecedented is rarely used properly. This time, it’s being used properly. It’s unprecedented what’s going on around the world, and obviously Covid itself is a main attribute. The economy would be in shambles without the safety net of the CARES Act. In a normal recession unemployment goes up, delinquencies go up, charge-offs go up, home prices go down; none of that’s true here. Savings are up, incomes are up, home prices are up. So you will see the effect of this recession; you’re just not going to see it right away because of all the stimulus.”
Friday, October 16, 2020
Thursday, October 15, 2020
Increasing covid case numbers and lack of agreement on US fiscal stimulus has markets in a risk-off mood round the world. All but two of the 16 Asian equity markets we track closed lower overnight. Europe -- seeing rising covid numbers and proposing new lockdowns -- is red (19 of 19 markets we track) across the board. US major averages are all off this morning as well: Dow down 162 points (-0.57%), S&P 500 down -0.76%, Nasdaq down -1.19%, Russell 2000 down -0.66%.
Wednesday, October 14, 2020
The treasury secretary told Bloomberg News this morning that:
"U.S. DEBT MUST BE DEALT WITH OVER NEXT 10 YEARS."
Yep.... hmm... well... uhhhh... yyyyeah... that's good. Because, well, here's how the future of Federal debt is shaping UP:
Quick one for you this morning (our main weekly message to follow soon).
Asian equities were mixed overnight; 9 markets we track down, 7 up. While Brexit headlines remain concerning, the pound (unlike yesterday) is suggesting something constructive is in the works (+0.83% this morning). European stocks are leaning green, with 11 of the 19 bourses we follow presently higher on the session. US major averages are mixed: Dow +17 points (0.06%), S&P 500 up 0.09%, Nasdaq up 0.07%, Russell 2000 down -0.26%.
Tuesday, October 13, 2020
Well, time will tell if the stock market has it right this go-round, or if indeed we're staring down the latter stages of the third epoch bubble in one-fewer decades (remarkable, if so, but explainable, as I'll attempt to do in tomorrow's weekly message).
Investor expectations in Europe are tanking (per September survey readings), covid cases in Germany are rallying at their fastest pace since April and UK's Boris Johnson says a no-deal Brexit is essentially no big deal. I.e., the euro and the pound are getting pounded this morning, therefore, the dollar's in rally mode. Therefore, while stocks are feeling it, commodities are definitely taking it in the chin.
Monday, October 12, 2020
In my earlier "Charts of the Day: Hmm..." post I featured visuals showing the session's rise of NDX (Nasdaq 100 Index) and VXN (tracks implied volatility of NDX) and noted that days like today -- both rallying hard -- were rare.
Coincidentally, Bloomberg's Ye Xie noticed it as well and dug into the weeds a bit to find out just how rare the phenomenon has been, and what it typically spells in terms of near-term risk.
Well, following the other 4 times this (and a few other times that were a little less pronounced) has occurred since 2001, VXN did indeed serve as a legitimate short-term warning signal:
"(Bloomberg) -- It’s deja vu all over again. A surge in tech
stocks Monday was accompanied by higher volatility, offering an
eerie reminder of the August stocks melt-up that laid the
groundwork for September’s correction. In fact, it’s only the
fifth time since 2001 when the NDX rose more than 3% and VXN
increased at least 0.8 points. If we lower the threshold for the
NDX to a 2% gain, it’s still a fairly rare occurrence. And the
historical performance in the next two weeks aren’t really
For us, this is simply short-term stuff and nothing actionable at this point. But it's worth noting that all occurrences either came amid bear markets or, in one instance (2015), a double-digit correction.
Either because of, in spite of, or oblivious to a concerted effort by China to cheapen its lately-strengthening currency (one could make attendant bull or bear cases for the rest of Asia) Asian equities mostly rallied overnight, with 12 of the 16 markets we track closing in the green. Brexit talks this week are all the talk in Europe, and the action in equities and currencies (despite the warning cries) says the UK won't be busting out without a trade deal (the overwhelming political risk makes that my base case as well); all but 4 of the bourses we follow are trading higher so far this morning. U.S.'s major averages, expecting more stimulus (it'll come, whether it's pre or post election), anticipating special stuff out of Apple's big day tomorrow, and betting that positives will emerge from bank earnings results this week are nicely higher as I type: Dow up 269 points (0.94%), S&P 500 up 1.44%, Nasdaq up 2.13%, Russell 2000 up 0.51%.
Friday, October 9, 2020
"The real opportunities in macro, you have to wait for. You don't always have to be doing something.
Having lived a few of these markets before, you have to be very careful because you can lose P&L very quickly by getting too excited."
--Raoul Pal, 10/9/2020 RealVision Daily Briefing
Raoul is RealVision's founder and CEO, and one of today's great macro thinkers. Of course I'm quoting him today because, as clients and regular readers know, his comments echo our present thinking...
Thursday, October 8, 2020
The on again stimulus talks are giving legs to this week's rally, in the face of another 840k folks filing first-time unemployment claims (worse than expected), while nearly 11 million stay on the rolls (although that was fewer than expected). Asian equities rallied overnight nearly across the board, with 14 of the 16 markets we track in the green. Europe's nothing to sneeze at either; 15 of the 19 bourses we follow trading higher this morning. U.S. major averages are up across the board as I type: Dow up 88 points (0.31%), S&P 500 up 0.57%, Nasdaq up 0.36%, Russell 2000 up 0.73%.
Wednesday, October 7, 2020
I think it's safe to say that history has never concluded a setup like the current without seeing stocks suffer a significant, protracted bear market in the process (the Feb/March experience btw doesn't come close). So the question has to be, how does one manage a portfolio amid historic certainty that before the next true expansion or bull market gets underway stocks will experience major, extended losses?
Equity markets are attempting to claw back yesterday's losses, as the President claws back yesterday's no-stimulus-till-post-election pledge: A perfect example of how tweet-possessed traders have become, and how strong the belief in the reflexive nature of the stock market; i.e., that rising stock prices engender robust animal spirits (economic action), and vice versa.
Tuesday, October 6, 2020
Asian stocks for the most part continued their rally into the week, with 12 of the 16 markets we track closing higher overnight. Same for Europe, with 14 of the 19 we follow in the green so far this morning. U.S. major stocks are more or less hanging in there as well: Dow up 116 points (0.41%), S&P 500 up 0.12%, Nasdaq flat -0.01%, Russell 2000 up 0.99%.
Monday, October 5, 2020
Optimism over US fiscal stimulus prospects and positive commentary around the President's present condition is overcoming news of re-lockdowns in New York City, Spain, France, UK and the Czech Republic as global markets get underway this week.
Wednesday, September 30, 2020
Okay, just one more before I go quiet for a few days. This speaks as much as anything as to why we continue to sound a cautious note...
Macro strategist Julien Brigden tweeted this today above a Bloomberg news search titled "job cuts, firings, layoffs."
In yesterday's morning note I pointed out what motivates policymakers these days (the market). If you happen to struggle with that, with my cynicism that is, well, struggle away.
It's not that I don't get that a buoyant market leads to confidence and a buoyantly-spending consumer, it's that 36 years of experience and the study of 360+ years of history tells me that such irresponsible pumping of markets and allocation of public resources tends to ultimately lead to extreme financial pain, not only for the unsuspecting investors who get sucked in, but for the folks who truly need the help, as deflating bubbles deflate the desire, if not the means, to consume beyond one's basic necessities, destroying opportunity in the process.
Tuesday, September 29, 2020
“We definitely need another round of stimulus here, not only for confidence for the American public and workers, but also for the markets,” Michelle Connell, the owner and president of Portia Capital Management, said on Bloomberg Television. “Going into this election, that would definitely help.”
Monday, September 28, 2020
Sunday, September 27, 2020
Saturday, September 26, 2020
Friday, September 25, 2020
Asian equities were mixed overnight, 10 markets we track closed up, 6 down. Europe's suffering so far this morning, with only 3 of the 19 markets we track trading higher. U.S. stocks are starting the day in the red as well: Dow down 100 points (-0.37%), S&P 500 down -0.38%, Nasdaq down -0.19%, Russell 2000 down -0.52%.
Thursday, September 24, 2020
Asian equities, no surprise, got hammered overnight, with all but 2 of the markets we track closing notably in the red. Europe's sliding as well this morning, with all but 3 of the 19 bourses we follow trading lower. U.S. stocks have been all over the place this morning: As I type: Dow down 40 points (-0.15%), SP500 down -0.16%, Nasdaq down -0.10%, Russell 2000 down a big -1.48%.
Wednesday, September 23, 2020
Asian equity markets were mixed overnight; 9 down, 7 up. Europe's hanging in there; 13 of the markets we track are higher, 6 are trading lower as I type. The U.S.'s major averages are struggling one hour into today's session: Dow (despite Nike) down 38 points (0.14%), S&P 500 down -0.53%, Nasdaq down -0.85%, Russell 2000 down -1.08%.
We'll start this week's message off by looking at the data I shared in our internal research call yesterday afternoon. The topic was the day's market internals.
The reason I'm using yesterday's action as my segue to this week's message is because in a number of ways it serves as a nice microcosm of the 2020 equity market to date.
Tuesday, September 22, 2020
Asian equities continue to struggle this week; 13 of the 16 markets we track closed down notably overnight. European stocks are fairing better this morning with 15 of the 19 bourses we follow presently in the green. U.S. stocks are struggling just a bit to start the day: Dow down 36 points (0.13%), S&P 500 flat, up 0.06%, Nasdaq flat, up 0.03%, Russell 2000 down -0.60%.
Monday, September 21, 2020
Yet another jolt to the U.S. political setup, Covid breaking above March's numbers in Europe and a concerning report on major global banks and their alleged relationships with "dangerous players" over the past two decades has world asset markets on edge this morning.
Saturday, September 19, 2020
In yesterday's macro update I mentioned that
"...not everyone agrees with our presently cautious bent. I mean, some folks actually believe now's the time to take the leap and buy the recent dip with both fists."
Well, that's putting it mildly!
Friday, September 18, 2020
Our proprietary macro index gave up 4 points this week; net score -14.00.
Yesterday I asked you to
Asian equities, on balance, rallied a bit overnight, with 10 of the 16 markets we track closing in the green. Europe, on the other hand, is struggling so far on the session, with only 3 of the 19 bourses we track presently in the green. U.S. equity averages are essentially flat. Dow down 58 points (-0.21%), S&P 500 down -0.08%, Nasdaq up 0.15%, Russell 2000 up 0.28%.
Thursday, September 17, 2020
Asian equities got hammered overnight, with all but 2 of the markets we track closing in the red. Europe, while well off the session lows, is taking a beating this morning as well; all but 5 of the 19 bourses we follow presently trading lower. U.S. stocks, also presently off the session lows, are red across the board as I type: Dow down 63 points (-0.22%), S&P 500 down 0.85%, Nasdaq down 1.42%, Russell 2000 down 1.31%.
In our effort to keep you informed as to what we're thinking in the here and now we're forever highlighting herein the at-the-moment trends and developments that instruct our entries into, exits out of, and hedges on various asset classes and securities. Underneath it all of course is the broad macro picture, global general conditions, if you will, that command our attention (analyzing, interpreting, testing, hypothesizing) on virtually a 24/7 basis.
Wednesday, September 16, 2020
Asian equities had a mixed session overnight, with 7 of the 16 markets we track closing lower. Same for Europe this morning, 9 of the 19 bourses we follow currently in the red. And "mixed" pretty much characterizes U.S. stocks to start today's session: Dow up 91 points (0.32%), S&P 500 up 0.11%, Nasdaq down -0.19%, Russell 2000 up 0.75%.
Tuesday, September 15, 2020
Just began digging into the latest Bank for International Settlements Quarterly Review (always a must read, but only if you're, like me, a total geek), released yesterday, and can't help but quote from the opening few paragraphs, as they so echo what you've been reading herein the past months:
Better than expected data out of China inspired a rally in Asia that saw all but 3 of the 16 markets we track closing higher overnight. Europe, riding a sentiment survey that bested all economists' expectations, is following suit so far this morning; 15 of the 19 bourses we follow in the green. And not to be left out this morning are the U.S. equity markets: Dow up 133 points (0.48%), S&P 500 up 0.87%, Nasdaq up 1.51%, Russell 2000 up 0.47%.
Monday, September 14, 2020
Optimistic vaccine headlines and a bit of merger mania saw Asian equities rally overnight (12 of the 16 markets we track closed in the green) and has Europe, on balance, in rally mode as well this morning (12 of the 19 bourses we track up on the session thus far). U.S. equities are bouncing back from two weeks of decline rather nicely: Dow up 319 points (1.30%), S&P 500 up 1.52%, Nasdaq up 2.06%, Russell 2000 up 1.27%.
Friday, September 11, 2020
Asian equities traded mostly higher overnight, with 12 of the 16 markets we track closing in the green. Europe's limping a bit into the U.S. session this morning, with 9 of the 19 bourses we track trading lower. U.S. stocks are (save for small caps) once again catching an early bid: Dow up 190 points (0.69%), S&P 500 up 0.51%, Nasdaq up 0.16%, Russell 2000 down -0.45%.
The VIX (SP500 implied volatility) is down -7.67%. VXN (Nasdaq vol) is down -4.38%. Now, don't be fooled by those steep declines in the pricing of volatility, 27.48 and 36.35 respectively are very precarious levels for stocks broadly.
Thursday, September 10, 2020
It's just a few minutes before the open on this smokey (I live in California) Thursday morning, and despite weekly jobless claims coming in higher than expected, and the U.S. dollar taking a sound beating this morning, U.S. equity futures just turned from notably red to nicely green. Hmm...
Wednesday, September 9, 2020
Tuesday, September 8, 2020
Despite heightened trade tensions between China and the US, as well as border tension between China and India, all but 3 (one being India) of the Asian markets we track closed in the green overnight. Europe, on the other hand, is having a very rough day; all 19 of the bourses we track are trading lower as I type. As is the U.S. so far: Dow down 418 points (-1.49%), S&P 500 down -1.65%, Nasdaq down -2.17%, Russell 2000 down -1.86%.
Monday, September 7, 2020
From William Strauss and Neil Howell's insightful and provocative book: The Fourth Turning: What the Cycles of History Tell Us About America's Next Rendezvous with Destiny:
Saturday, September 5, 2020
Friday, September 4, 2020
So how do we couch the good news around the latest jobs numbers?
Millions of new jobs have been created over the past few months,
Asian stocks for the most part took the U.S.'s lead into their session last night; 13 of the 16 markets we track closed in the red. Europe's fairing a bit better this morning; 10 of 19 indices trading higher so far. U.S. equities are struggling: Dow down 109 points (-0.39%), S&P 500 down -1.25%, Nasdaq down -2.79%, Russell 2000 down -1.16%.
Thursday, September 3, 2020
Asian equities closed mixed overnight (8 of the markets we track up, 8 down). 12 of the 19 European indices we track are in the green so far this morning. U.S. averages are, save for the 30-stock Dow, are struggling this morning: Dow up 61 points (0.21%), S&P 500 down -0.59%, Nasdaq down -1.79%, Russell 2000 down -0.40%.
Wednesday, September 2, 2020
On July 27th I wrote herein: note the bolded sentence...
Given all that’s evolved over the past several decades, given the complete carry-dependent state of the global economy, there’s only one road for the powers-that-be to take going forward; a steady, unrelenting debasement of the US dollar.
Asian equities closed mostly in the green (12 of the 16 markets we track) overnight, Europe's trading mostly higher this morning as well (14 of 19), and the U.S. averages are somewhat mixed as the session gets underway: Dow up 209 points (0.75%), S&P 500 up 0.58%, Nasdaq down -0.13%, Russell 2000 flat +0.04%.
Tuesday, September 1, 2020
Asian stocks closed mostly higher, 10 out of 16 markets we track in the green, last night. Europe's mixed, 10 out of 19 bourses in the red. U.S. equities (save for small caps) are somewhat back (Nasdaq still) in rally mode this morning: Dow up 94 points (0.33%), S&P 500 up 0.36%, Nasdaq up 0.96%, Russell 2000 down -0.05%.
Monday, August 31, 2020
Only one Asian equity index, of the 16 we track, closed higher last night, Japan. And that was apparently thanks to news that Warren Buffett is snatching up stock ($6 billion worth) in Japanese commodities traders. That, plus his recent foray into gold miners suggests that he sympathizes with the base case that happens to presently have us more in commodities than we've ever been.
Europe's not much better so far this morning; 13 of the 19 bourses we track are in the red.
U.S. equities are troubled a bit this morning as well: Dow down 211 points (-0.74%). S&P 500 flat, -0.09%. Nasdaq up 0.55%. Russell 2000 down 0.65%.
Sunday, August 30, 2020
During an insightful discussion featuring macro minds Raoul Pal and Larry McDonald, Larry tells of what inspired, then killed, the short-lived Cobra farming phenomenon of late-1800s India:
Saturday, August 29, 2020
I thought I'd share some of what I added to our research thread this morning. I.e., the more our clients understand what goes on down in the weeds, the more they can put volatility into perspective when it shows up.
Friday, August 28, 2020
Hey, I think I found one!
Yesterday I blogged:
Asian stocks were mixed overnight; the 16 markets we track split the difference by the close, 8 green/8 red. Japan took the hardest hit on news that the longest-running prime minister in its history is stepping down for health reasons. The yen is our third-best performing core portfolio component this morning. I suspect that's not for defensive reasons (the reason we own it) but out of uncertainty, in that Abe's economic scheme was forever a resoundingly yen-weakening proposition. Europe's messy, with 15 of the 19 bourses we track in the red. The U.S. (save for the Nasdaq) is essentially flat so far this morning: Dow up 24 points (0.08%), S&P 500 flat, +0.05%, Nasdaq up 0.35%, Russell 2000 flat -0.07%.
Thursday, August 27, 2020
Asian equities were the definition of mixed overnight; 8 of the markets we track up, 8 down. Europe's getting hammered this morning; all but two of the 19 indices we track are in the red as I type. U.S. equity traders, on the other hand, are, for the most part, liking what they heard from Fed Chairman Powell this morning (more on that later). Dow up 178 (0.63%), S&P 500 up 0.24%, Nasdaq flat +0.02%, Russell 2000 flat -0.04%.
Tuesday, August 25, 2020
Asian stocks closed mostly higher overnight; 11 of the 16 markets we track in the green. Europe, however, had a rough go of it today; 15 of the 19 indices we follow closed in the red. U.S. equities were mixed, but definitely (price-wise) with a positive tilt: Dow down 60 points (-0.21%), S&P 500 up 0.36%, Nasdaq up 0.76%, Russell 2000 up 0.32%.
Monday, August 24, 2020
While we're presently actively exploring safe ways to generate better yields on the historically (for us) high level of cash we're sitting on, I want to reiterate here the point I've been making of late to some of our largest investors: Yes, we're sitting on an atypically for us large chunk of cash, but, like everything else we do -- while, sure, it's defensive too -- it's strategic.
It was risk-on overnight in Asia, with 14 of the 16 markets we track closing higher. Europe's feeling it as well this morning; 17 of the 19 indices we follow comfortably in the green so far. The U.S. too; Dow up 270 (+0.97%), S&P 500 up 0.69%, Nasdaq up 0.35%, Russell 2000 up 0.84%.
Saturday, August 22, 2020
The good news, as we've been reporting herein of late, is that the credit markets -- while ticking ever-so-slightly tighter last week -- have calmed down markedly since the Feb-March panic. I mentioned in a post yesterday that while another equity market selloff from these levels could come swiftly and invoke fears of another liquidity event (all babies going the way of the bathwater), it's our view that the Fed has the liquidity risk properly attended to. And, therefore, such an event we (PWA) would likely exploit to gain exposure to what we're presently after at more opportune prices.
Friday, August 21, 2020
Housing permits and starts have nearly recaptured their pre-recession uptrend.
Morning Note: More Bad Breadth. Plus, The Lately-Rising Dollar and What We're Thinking/Doing About It
Asian equities ended the week on a positive note, with 13 of the 16 markets we track closing higher overnight. Can't quite say the same, however, for Europe, at least so far this morning; 11 of the 19 indices we follow trading lower. U.S. equities, while mostly green, continue to exhibit very concerning breadth (adding the S&P 500 Equal Weight Index herein to illustrate the point): Dow up 84 points (0.30%), S&P 500 up 0.11%, Nasdaq up 0.32%, Russell 2000 down -0.96%, S&P Equal Weight -0.36%.
Thursday, August 20, 2020
Asian equities took a hit overnight, with all 16 markets we track finishing the session lower. Europe's no better this morning; all 19 indices on our radar are in the red. U.S. stocks, on the other hand, are mixed: Dow down 87 points (-0.31%), S&P 500 down -0.15%, Nasdaq up 0.26%, Russell 2000 down -0.74%.
Wednesday, August 19, 2020
"Yesterday’s record close in interesting company ... data compiled by
@Bloomberg reveal that historical days when S&P 500 gained 0.28% or more while 42% or less of members were advancing, were only before & during tech bust (obviously, a small sample size)"
Now, when I say "the market" hasn't even begun to roll over, I'm speaking of the S&P 500 Index, which currently is more concentrated in its top 5 positions than I believe it's ever been.
Here's the one-year chart:
Now, if the market is indeed more than, say, the top 5 weightings in a given index, well, then, things aren't quite as robust as they might otherwise appear.
Here's the one-year chart for the S&P 500 Equal Weight Index (i.e., each component weighed the same):
Of the thirteen featured below, 7 remain in the red on the year:
Of course we should absolutely expect as much given the lousy internals I spoke about in the video.
Yes, as I continue to stress, there's MUCH more to play out before the curtain closes on this particular episode...Thanks for reading,
Tuesday, August 18, 2020
Asian stocks were mostly green overnight with 10 of the 16 markets we track closing higher. Europe has pretty much surrendered its gains from the open, as I type 15 of the 19 indices we track are in the red. US equities are mixed: Dow down 87 points (-0.31%), S&P 500 flat, Nasdaq up 0.30%, Russell 2000 down 0.94%.
Monday, August 17, 2020
Asian equities traded mixed overnight, although China saw a nice rally, as its central bank did more of the central bank stuff that world equity markets are lapping up these days. There's of course the obligatory how long can they keep doing this, and/or, how long will markets continue to buy it? questions come to mind, but we'll continue to explore those in other commentary. Europe's having a nice morning so far, with 16 of the 19 markets we track in the green. US equities are mixed: Dow down 75 points (-0.27%), S&P 500 up 0.29%, Nasdaq up 0.70%, Russell 2000 up 0.38%.
Sunday, August 16, 2020
Amid all of the fancy fundamental and technical analyses firms like ours perform and peruse, we must never lose sight of the simple fact that what we are truly analyzing -- to repeat the gist of our August 5th message -- under all circumstances, and with no exceptions, are the actions and reactions of human beings; on behalf of themselves and their families, on behalf of their business interests, and on behalf of the political posts/parties they occupy -- the world over.
Friday, August 14, 2020
Asian equities traded mostly lower overnight, with 10 of the 16 markets we track closing in the red. Europe's bleeding literally across the board; every one of the 19 equity indices we track is trading lower this morning. U.S. equities are mixed: Dow up 43 points (0.16%), S&P 500 literally flat, Nasdaq down -0.26%, Russell 2000 down -0.19%.
Thursday, August 13, 2020
Asian equities traded mostly higher overnight, with 13 of the 16 markets we track closing in the green. No such luck, however, for Europe this morning; only 4 of the 19 indices we track trading higher. U.S. stocks are mixed as I type: Dow down 31 points (-0.11%), S&P 500 up 0.07%, Nasdaq up 0.47%, Russell 2000 up 0.24%.
Wednesday, August 12, 2020
Asian equities closed yet again mixed overnight; 7 of the markets we track in the green, 9 in the red. Europe, on the other hand, is yet again beginning the day in impressive fashion; 16 of the 19 markets we track presently trading higher. US equities are nicely higher across the board this morning: Dow up 260 points (+.94%), S&P 500 up 1.27%, Nasdaq up 1.63%, Russell 2000 up 0.79%.
The VIX (SP500 volatility) is getting crushed, -7.78% to 22.22. VXN (Nasdaq vol) is supporting this morning's rally thus far as well, -6.65% to 29.75.
Oil futures are up 1.61%, gold's are up $2, silver's down 1% (futures that is, spot price is up), copper's down -.61% and the ag complex is mostly green as I type.
The 10-year treasury is trading lower (yield higher) and the US dollar index is off by -0.11%.
Our core portfolio is off to a decent start this morning; up 1.05% as I type.
I'll circle back a little later with our weekly message. In the meantime here's Popular Delusion's Dylan Grice on what he thinks investing is "about".
"Everyone thinks investing is about being smart. its more about being different."
I agree, although I'd add objectivity and humility...Have a great day!
Tuesday, August 11, 2020
In client review conversations -- in response to the disbelief our more veteran/tutored clients express about the present state of market affairs -- I often find myself harkening back to those tech bubble days (spring of 2000) when retail traders threw all caution to the wind and bid tech stocks into the proverbial stratosphere.
Asian equities traded in mixed, by definition, fashion overnight: 8 of the markets we track closed higher, 8 lower. European markets this morning, however, possess no such ambiguity; 18 of the 19 bourses we follow are solidly in the green as I type. US equities are once again starting the day in let's call it confused fashion; Dow up 296 points (+1.07%), S&P 500 up .21%, Nasdaq down -.80%, Russell 2000 up .94%.
Monday, August 10, 2020
Asian equities traded mostly in the green overnight; 12 of the 16 markets we track closed higher. Same for Europe this morning; 16 of 19 indices presently in the green. U.S. equities are mixed as I type, with the Dow up 244 points (.91%), the S&P 500 up .18%, the Nasdaq down -0.53% and the Russell 2000 up 1.5%.
Sunday, August 9, 2020
Saturday, August 8, 2020
Friday, August 7, 2020
Asian equities had a rough go of it overnight, with all but 3 of the 16 markets we track trading lower; US moves against select Chinese-owned companies inspired an instant wave of selling. Europe's trading mixed this morning, while U.S. major averages are, save for smallcaps, trading modestly negative: Dow down 100 points (-.36%), S&P 500 down -0.18%, Nasdaq down -0.17%, Russell 2000 up 0.12%.
Thursday, August 6, 2020
Wednesday, August 5, 2020
Tuesday, August 4, 2020
Monday, August 3, 2020
Friday, July 31, 2020
Thursday, July 30, 2020
BIZD: ETF TRACKS INDEX OF BUSINESS DEVELOPMENT COMPANIES (BUYERS OF THE WORST CREDITS): Ytd: -30.4%, retraced <50% of BM decline...
LEVERAGED LOAN PRICE INDEX: Ytd: -5.3%, retraced >62% of BM decline…
PSP (Private Equity ETF): Ytd: -15.80%, retraced >62% of BM decline.
HYG: Ytd: -308 bps, retraced >76% of BM decline…
MUNI/TREASURY SPREAD: 122% of 10-yr treas, 61% wider vs equity mkt peak
HY SPREAD (1-day behind): 489 bps, 36% wider vs equity mkt peak
Ba SPREAD: 342 bps, 60% wider vs equity mkt peak
BB-BBB SPREAD: 168 bps, 95% wider vs equity mkt peak
CDS Inv Grade Index 70.37
PWA FIN’L STRESS INDEX -12.5
The wealth that is made by the financial players (and businesses and individuals) who are implementing carry trades is not real wealth of the sort that derives from an economy’s greater ability to produce better goods and services that the general population needs and desires. On the contrary, it causes financial asset prices to become hopelessly distorted, unhinged from the real economy, and therefore ends up misdirecting scarce capital into potentially unproductive uses. Over time, the economy will perform progressively more poorly, with income and wealth more and more concentrated in a few hands.
Nevertheless, it is also important to realize that the carry regime, as it progresses, fundamentally weakens the true power of central banks (and by extension governments). This may seem counterintuitive, but as with regulatory capture, central banks are themselves “captured” by carry. During the intensely deflationary carry crashes (such as occurred in 2008), they appear to have no option other than to increase moral hazard further, via even greater intervention and bailouts. In one of the various seemingly contradictory aspects of the carry regime, central bankers seem to have enormous power—their extraordinary power to create high-powered money, set short-term interest rates, and strongly influence financial markets with everything they say—but ultimately they themselves have little latitude to act. Central banks become merely the agents of carry. Their seeming immense power is, in reality, mostly illusory.
Wednesday, July 29, 2020
"...without question, you want to own things that are priced in dollars!
Now, of course U.S. stocks are priced in dollars, right? Right! And, sure, own some (we do), but be careful doing so when they're priced at 1999ish valuations (by several metrics) and the economy has the proverbial Mount Everest yet to climb.
And definitely own other things priced in dollars that aren't historically expensive."
"Our commodities exposure (DBA and DBB being brand new positions) now makes up roughly 20% of our core portfolio; and I suspect we'll be incrementally adding as things progress."
"You're about to experience, at least at the open, what I'll call a classic what-others-think-others-are-going-to-do rally.
The linked phrase above was the subtitle to my April 10 post; I recommend you read it (again?) when you have a chance. Here's a snippet:"My base case that stocks have yet to see the worst is entirely based on data and experience. My illustrating aplenty herein that bear market retracement rallies are the norm is meant to help our readers understand how incredibly risky it is to wade into this snap-back rally as if the bear market is already over. Which, by the way, would make it the shortest on record -- amid the worst economy on modern record! Just seems like a very far-fetched notion if you ask me..."Still my base case, by the way...In a nutshell -- in the short-run:"Keynes suggested circa a century ago that trading (as opposed to, I'll say, investing in) markets is not about assessing fundamentals, it's about what traders think other traders are going to do. And for the more savvy traders, it's about what they think other traders think other traders are going to do.""
"The next few weeks will be telling, as, per the latest news, a number of states are delaying, and or, reversing certain stages/aspects of their reopening plans.
Half of this week's improvement showed up in the commodity space. Which, coincidentally, is something we anticipated and, therefore, have begun to express in client portfolios.
I should tell you, however, that while rising commodity prices does show up as a positive in our macro index, our bullishness there has everything to do with the prospects for a weaker dollar going forward (and, ultimately, with regard to metals, the prospects for infrastructure spending), as opposed to the prospects for robust economic growth anytime soon."
"...in a world where the world's governments are willing to weaponize their equity markets against their respective economic woes, not to mention against each other, stock prices can remain detached from economic reality for what can seem like a very long time. History (those charts I alluded to), however, strongly suggests that the reattachment can be most painful..."From "The Most Bullish Chart for Stocks Right Now" on July 6:
"Now this one guys/gals is the most bullish chart of all for stocks for the remainder of 2020. And it's really incredible. It's the TGA (treasury general account). Think of it as the treasury's piggy bank. The amount you see there amounts to well over a trillion dollars (1.6 in total) of new borrowing (a trillion being the normal entire-year's budget deficit) that essentially wasn't needed to fund the government. They literally issued this debt just to hold onto the cash. So, why? This is an historic first! Well, as you know, or should know, I struggle with conspiracy theories, but this one is so blatant I can't help it. This is Mnuchin essentially assuring that no matter what, whether Congress passes more stimulus, and/or regardless of what the Fed does, he has the firepower to juice the markets during the critical months leading into you-know-what in November.
Yes, this is huge support for stocks, you can bet on it. However, betting big on stocks given everything else going on (and there's lots) is -- despite what I just wrote -- hugely risky. Stocks can still fall in the face of rampant stimulus, I've seen it... If not over the next few months, dear Lord, just wait till we reach the point when they're forced to let up, even modestly, on the life support for stocks:"
To add a little more to our messaging herein that the equity market is historically disconnected from economic reality these days, here's The Wall Street Journal's Nick Timiraos quoting from this week's banks' earnings calls:WFC: “Our view of the length and severity of the economic downturn has deteriorated considerably"
JPM: "The recessionary part of this you’re going to see down the road"
Citi: "The pandemic has a grip on the economy and it doesn’t seem likely to loosen..."
"The treasury will issue debt without restraint and the Fed will purchase it likewise, indefinitely.
Commodities -- gold especially -- are the most obvious trade under these circumstances. US equities stand to ultimately benefit as well, however -- and this will produce great anxiety for the Fed along the way (due to extreme global carry) -- with bouts of extreme volatility, given the unavoidable economic stagnation such a scenario creates, and the potential for huge political disruption -- regulation, taxation, etc. -- as growing income/wealth inequality continues unabated (exacerbated, in fact) going forward.
Foreign market equities, emerging markets in particular, stand to outperform the US markedly for several years to come; but -- while we anticipate adding there incrementally in the near-term -- we're going to let the COVID situation and the coming election play themselves out before we go there in a big way.
The immediate question for equity markets being, given the abysmal state of macro affairs, political risk, geopolitical risk and so on, will there be the 50+% correction that will reset valuations, etc., to the point I believe necessary for the US market to recapture any semblance of a “fundamentally” investable setup -- at all or anytime soon? Bottom line; that risk is there, which demands that we hedge our equity exposure against a major drawdown either until one occurs or until the risk abates…"
Tuesday, July 28, 2020
Monday, July 27, 2020
Saturday, July 25, 2020
"To really drive home for you the precariousness of current conditions from a purely asset performance standpoint, just two things you need to know: gold is up 23.5% on the year, and if you're willing to lock up your money for 10 years, the U.S. treasury will pay you 0.58% on it annually."