Monday, November 30, 2020

The Ultimate Object of the Fed's Affection...

Listening to RealVision managing editor Ed Harrison this evening has me thinking about my recent conversations with clients during our portfolio review sessions.

Morning Note: The Elephant in the Boat

 Asset prices, the world over, are swimming in a sea of red as we start the week.

Friday, November 27, 2020

Macro and Sentiment Update: Our Index Is Out of the Red! And Positioning's A Bit Precarious

Well, for the first time since October 2019 our PWA Macro Index is out of the red. Can't quite say "in the green", since it presently scores a 0. But what a rebound off of a -82.69 back in June!

Morning Note: Wall Street's Incentives...

Just a couple of quick notes this morning, first this morning's numbers, then I'll follow with something light after I score our weekly macro and sentiment indexes.

Wednesday, November 25, 2020

Chart of the Day: Are the latest gains "durable"?

In our client review meetings these days I of course expound on much (the good and the bad) of what you've read herein, and when it comes to the historic chasm that separates current stock prices from underlying fundamentals I typically declare that the major averages would need to decline by easily two-thirds (a bit more than the '08 experience) to catch down to present reality. 

This Week's Message: This Ain't About Capitalism...

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!).

Morning Note: "Obvious Things"

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

Morning Note: Gold's Woes, and a couple tweaks...

Positive vaccine news, improving global data, political certainty and an incoming US treasury secretary with a penchant for easy money has stocks in rally mode this week. 

Monday, November 23, 2020

Morning Note: How To Tell Good From Bad Economists

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

Macro Update: A Little Something for Everybody

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.

Morning Note: Careful What You Ask For!

U.S. stocks have found sanguinity at the open this morning, after getting rocked a bit overnight by news that the Treasury has no interest in expanding emergency assistance measures and asked the Fed to return all remaining funds to the government. Secretary Mnuchin's comment this morning that folks are misinterpreting the message I suspect helped calm the waters a bit.

Thursday, November 19, 2020

Well, Wow!!

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. 

Morning Note: No Limits

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

Morning Note: Windy Out There!

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%.

This Week's Message: A New Paradigm: A Synopsis of Our View on Probabilities From Here

It is virtually impossible for general conditions to get back to pre-covid levels, if, for example, general conditions include the balance sheet condition of US institutions.

Tuesday, November 17, 2020

Quote of the Day: "The One Reality"

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.

Inflation and Interest Rates May Not 'Quite' Go Hand-in-Hand Next Year...

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. 

Morning Note: "A key in 2021"

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

Morning Note: A Unique Display

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!). 

Friday, November 13, 2020

Macro Update: Forget About Normalcy...

While 6 of the 49 inputs to our proprietary macro index saw their scores change this week, they essentially balanced each other out: Our overall score remained stuck at -6.12 for the third consecutive week:

Morning Note: I'm Relatively Constructive, However, The Irremediable Looms...

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

Morning Note: "One Major Problem In Investing"

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

Morning Note: Bad Breadth

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

Chart of the Day: Leaders Rolling Over

While what's worked (namely the FAAMGs) year-to-date has been rolling over of late, concentration among the S&P 500's largest 5 positions (FAAMG) still sits way above the previous tech-bubble high (top).

Morning Note: Folks Like Company

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

This Week's Message: Just a Peek Into The End-Game of the Debt Super-Cycle

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%:

Morning Note: Stay Tuned...

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


The following from Hoisington Capital Management's (home of revered macro thinker Lacy Hunt) latest must-read quarterly newsletter should sound very familiar to clients and regular readers:   emphasis mine...

Friday, November 6, 2020

Macro Update: Fuggetabout Tomorrow

Our proprietary macro index (-6.12) broke even on the week; with two inputs improving, two deteriorating:

Morning Note: Swept Up In Moods

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

Morning Note: Don't Be the Dolt

Well, that warm, fuzzy feeling you might be having over this week's rally in stocks maybe should be tempered a tiny bit.

I'm not talking politics, I'm talking economics.

Wednesday, November 4, 2020

Market Commentary (video)

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.


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:

Chart of the Day

In this morning's note I alluded to a rotation that's taken place the past few weeks, from the high-flying techy names to the value "reflation" names. I also suggested that the premise beneath today's reversal of that trend is ultimately faulty.

Morning Note: Whimsical

If you look at the major U.S. stock market indices this morning you'd think all's well on Wall Street. But if you open a few doors and peak inside, well, hmm...

Tuesday, November 3, 2020

Morning Note: A Wiley Sort of Market???

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

Core Performance Update (video)

See year-to-date results for global equity markets and commodities beneath the video player below.

Morning Note: Entering New Territory

October Purchasing Managers Indices (PMI) were released last evening for much of the world, and, per much of the world scoring above 50, much of the world's economy improved (vs September) last month. That, I suspect, plus -- in the face of covid lockdowns and a contentious U.S. election -- some dip-buying following the worst week since March for global stock markets has stocks in rally mode this morning.