Monday, October 19, 2020

Morning Note: The Prelude (well, reminiscent of a past prelude)

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%.

The VIX (SP500 implied volatility) is up 2.44%, VXN (Nasdaq vol) is up 2.19%.

Oil futures are up 0.56%, gold's up 0.45%, silver's up 2.14%, copper futures are up 0.74% and the ag complex is up 0.74% as well.

The 10-year treasury is trading lower (yield higher) and the dollar is down a notable 0.42%.

Led by silver, banks, ag, base metals and Eurozone equities, our core portfolio is bucking the negative (save for the Russell) stock market impulse, up 0.37% so far this morning. Tech stocks and Verizon being our only two losers at the moment.

If you're amazed at how the U.S. stock market has held up so well against what you know about the underlying economy, well, looks (read the major averages) can be deceiving. In reality, a huge swath of the U.S. stock market remains notably in the red on the year. 

It's all about growth (high momentum expensive stocks) winning big over value (cheap by traditional valuation metrics stocks). Does remind me of the prelude to the early 2000s (not a prediction, btw):

Have a great day!

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