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. 

13 of the 16 Asian markets we track closed in the green overnight. All but 2 of the European bourses we follow are nicely higher so far this morning. And, as I type, there's no ambiguity among U.S. stocks: Dow up 379 points (1.28%), S&P 500 up 1.12%, Nasdaq up 0.67%, Russell 2000 up 1.44%.

The VIX (SP500 implied volatility) is down 2.34%. VXN (Nasdaq vol) is down 0.19%.

Oil futures are up 4.27%, gold's down 1.78%, silver's down 2.06%, copper futures are up 1.29% and the ag complex is up 0.23%.

The 10-year treasury is down (yield up) and the dollar is off 0.21%.

Buoyed by energy, banks, financials, industrials, materials and AT&T, while silver, gold and the yen provide some resistance, our core portfolio is up 0.70% to start the day.

In case you're wondering about gold's latest woes, recall that we've been anticipating some corrective action for some time now. Our technical analysis leans toward possibly more to come, so, despite the pro-gold policies the presumptive next treasury secretary embraces (adds to the long-term bullish narrative), we're not eager just yet to add to our position. 

We did, however, make some modest moves in other places first thing this morning...

Here's from our internal notes:

11/23/2020: Adding a bit more energy exposure (cutting some utilities exposure) by introducing OIH to the core mix. OIH is an energy ETF that focuses specifically on oil and gas service companies, as opposed to the producers themselves. This is a nice complement to XLE, as it’s concentrated in 25 names that will be instrumental as companies scramble to bring capacity back on line as folks, and businesses, become more mobile post-covid (with the attendant rise in oil and gas prices). A substantial infrastructure bill, if, as expected, is passed in 2021, will of course add upward pressure to the space as well.

It’s a more volatile offering than XLE (with, at this juncture, more upside potential). At the bottom in March the ETF was down 75%. Still down 47% year to date, even after today’s 10% surge. 
Also adding another 2% of core exposure to Emerging Mkts (cutting healthcare a bit). The opportunities across EM as the world emerges from covid, against a concerted attempt in the U.S. to keep the dollar relatively low -- not to mention compelling relative valuations in many markets -- virtually demands that we add to our EM exposure… We’ll to do it broadly utilizing VWO for now.
Have a great day!

No comments:

Post a Comment