Thursday, August 20, 2020

Morning Note: Happy to be Patient

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%.

The VIX (SP500 volatility) is up 4.26% to 23.50, VXN (Nasdaq vol) is up 3.57% to 23.49.

Oil futures are down 3%, gold's off 0.60%, silver's up 0.79%, copper futures are down 1.87% and the ag complex is down virtually across the board.

Bonds are rallying (rates falling) and the dollar's catching a bit of a bid, up 0.18% as I type.

Our core portfolio is feeling the weight of its dollar-sensitive positions this morning, off 0.59% at the moment. To give you a feel for breadth (which I've been touching on much of late), only 3 of our 17 positions are in the green; silver, tech (explains the better performance for the major US averages this morning) and the yen. Leading the losers are energy, emerging markets, Asia-pac, the Eurozone and materials.

Speaking of the dollar, per recent commentaries, we've been looking for an oversold bounce to ideally serve up a nice entry point (lower) to increase our core commodities exposure a bit. Interesting that the dollar is bouncing on a day when unemployment claims came in worse than expected and bond yields are crashing; meaning the move is likely more technical (oversold bounce) than anything fundamental. Should the data continue to disappoint (our expectation, on balance), and stocks react accordingly, a flame will be lit under the bottoms of the powers that be to agree on the next stimulus package. That could indeed add a bit more oomph to the dollar, and, possibly, give us that entry opportunity we're looking for. Time will tell, we're happy to be patient right here...

Have a great day!

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