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.

Asian equities leaned green overnight, with 10 of the 16 markets we track closing higher. Europe's seeing green nearly across the board, with all but 2 of the 19 bourses we follow trading higher. U.S. major averages are rising this morning, but to notably different degrees: Dow up 51 points (0.18%), S&P 500 up 0.35%, Nasdaq up 1.08%, Russell 2000 up 0.08%.

The VIX (SP500 volatility) is down 2.26%. VXN (Nasdaq vol), on the other hand, is, despite the Nasdaq's impressive rally, signaling angst in tech this morning, it's up 3.43%.

Oil futures are down 0.77%, gold's down 1.29%, silver's down 2.81%, copper futures are up 2.74% and the ag complex is up 0.90%.

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

Led by base metals, Asia-Pac equities, emerging market equities, tech and ag commodities -- but counterweighted by silver, energy, banks, gold and utilities, our core index is up 0.12% as I type. 

Interesting intermarket/sector action this morning. I.e., the typical correlations are notably out of whack, which speaks to typically low holiday volume. 

Keep the following (from the latest addition to my must-read book recommendations) firmly in mind as you continue to take in the uber-bullish narratives currently emerging from Wall Street. Not that they're necessarily wrong (although they are sucking folks into a dangerous setup), but it's very important to understand incentives:   emphasis mine...

"One powerful impetus toward overly optimistic forecasts lies in the very size of the institutions that employ the analyst. If you are the chief stock strategist for a huge firm like Goldman Sachs, Morgan Stanley, or Credit Suisse First Boston, you put your job at risk if you make a pessimistic public statement about the future of the markets. These giant institutions depend on a public that believes in ever-rising stock prices for everything from their lucrative IPO business to their retail accounts. Little wonder, then, that the strategists of these financial giants almost always predict that stock prices will rise in the coming year, no matter what their private opinion might be."

Levy, Leon; Linden, Eugene. The Mind of Wall Street 

Have a great day!
Marty