Morning Note

Rioting in the U.S., demonstrations in Hong Kong as Beijing tightens its grip, pandemic still in play, Chinese state-run ag companies halting imports of U.S. products, and, as I type, the Dow's up 45 points, treasuries are taking a hit and European equities are extending their strong rally. Asian equities were strong across the board overnight.

Now, on the flip side, tech stocks and oil are trading lower, gold higher, and the VIX is up 5%. Hmm...

Macro tweeter Jucojames echoed my general sentiment this morning:

"...long term asset allocators and investors have some of the easiest conditions ever present to make hugely impactful decisions IF they can avoid being crazy with the rest of the mob."

In the words of the great mathematician Benoit Mandelbrot:

"I agree with the orthodox economists that stock prices are probably not predictable in any useful sense of the term. But the risk certainly does follow patterns..."

"The key is spotting the regularity inside the irregular, the pattern in the formless."

Make no mistake, while stock prices of late appear to make zero fundamental sense, the underlying patterns in the internal market factors we track as well as the character of/trend in volatility of late says that — despite recent price action — equities are in a risky place right here...