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%.

The VIX (SP500 implied volatility) is down 3.91%. VXN (Nasdaq vol) is down 4.15%.

Oil futures are up 2.47%, gold's down 0.62%, silver's down 0.22%, copper futures are down 1.07% and the ag complex is unchanged so far this morning.

The 10-year treasury is flat and the dollar is catching a strong bid, up 0.44%.

Reflecting some pretty bad breadth this morning (the S&P Equal Weight Index [all members carry the same influence] is, for example, down 0.43%), our core portfolio is off 0.11%. Tech, Asia-Pac equities, utilities, staples and emerging market equities top our leader board. While banks, materials, industrials, base metals and financials are our heaviest downside drags.

This morning, economist Dave Rosenberg in essence pointed to what we pointed to yesterday afternoon:

"You see, if you tally up Microsoft, Apple Amazon, Facebook, Netflix, Tesla and Alphabet, we get a collective market cap of $7.64 trillion. You can fit three Canadian economies in that valuation pool!"

"If the group corrected to the Pre-COVID-19 peak, what would that mean as a percent decline from here? Well, the pre-COVID-19 peak was February 19th at $5.93 trillion... that is a 22% decline from here (-$1.7 trillion)." 

I emphasize in the second quote "Pre-COVID-19 peak!" Can't help but wonder what happens with one or two of these names once we're post-COVID-19.

And on this day:

"We remember those who were called upon to give all a person can give, and we remember those who were prepared to make that sacrifice if it were demanded of them in the line of duty, though it never was. Most of all, we remember the devotion and gallantry with which all of them ennobled their nation as they became champions of a noble cause."
-- Ronald Reagan

Take care,

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