Saturday, January 30, 2021

Quick Note on Market Manipulation

Dan posted an old video in our research chat this morning featuring an ex-hedge fund manager explaining how he, and others, used to manipulate the market for their own short-term benefit (the "others" of course still do).

Friday, January 29, 2021

Macro Update: Inflation, maybe?

We've given you lots to digest herein this wild week, so I'll keep our macro update light on words and heavy on visuals.

Morning Note: Twist to Fit

If, like a lot of folks, the GameStop story has you intrigued, and you happened to have missed this week's main message, give it a look, in it you'll find my take. News this morning is that it very much has the attention of the SEC.

Thursday, January 28, 2021

Morning Note: The Unexpectable

"Coming sure and fast, that profit of millions! But it never reached me. No; it wasn’t side-tracked by a sudden change in conditions. The market did not experience an abrupt reversal of form. Coffee did not pour into the country. What happened? The unexpectable! What had never happened in anybody’s experience; what I therefore had no reason to guard against. I added a new one to the long list of hazards of speculation that I must always keep before me. It was simply that the fellows who had sold me the coffee, the shorts, knew what was in store for them, and in their efforts to squirm out of the position into which they had sold themselves, devised a new way of welshing. They rushed to Washington for help, and got it."

--Jesse Livermore, circa 1923 

Wednesday, January 27, 2021

This Week's Message: Too Much of a Good Thing -- And -- Explaining GameStop

I recall 1999 like it was yesterday... Experiences that engender the most visceral sensations tend to remain prominent in one's psyche.

Morning Note: The Problem With the Charts vs The Fundamentals

Today's Fed announcement will be interesting.

As I wrote recently, while it's no secret that the U.S. Central Bank is ultra-sensitive to the stock market, they've lately been receiving some much-deserved, and inexcusably-overdue heat over blowing up the greatest equity market bubble in nearly a century.

Tuesday, January 26, 2021

Morning Note: "conventional wisdom had nothing to do with the truth"

Yes yes, new day, same 2021 story. If you missed yesterday's charts of the day, please go there now and I won't belabor the sector breadth issue here.

Monday, January 25, 2021

Charts of the Day: Why We Care About Sector Breadth

If you're at all wondering what keeps me harping on nearly every day lately about the poor sector breadth I'm noticing, well, Bespoke Investment Group -- having noticed it as well -- put some history to it this morning.

Morning Note: Disjointed!

Treasuries are in rally mode this morning, as is the implied volatility priced into S&P 500 options (the VIX), while energy, financial, material and industrial stocks, and most commodities (although food is up) are taking hits. 

Sunday, January 24, 2021

So Why is Wall Street Always So Bullish? "The easiest question of the day"

I recalled a recent conversation with a client while listening to an excellent, wide-ranging interview with investing legend Jeremy Grantham last week. 

Friday, January 22, 2021

Chart of the Day: Epic Concentration

Currency setups going forward, relative valuations, dividends and demographics in a number of developed and developing markets are factors suggesting that foreign equities may have an edge over the U.S. in coming years. 

Macro Update: Back to Zero -- And -- What Would Seem So Obvious

December truck tonnage (Christmas online shopping) -- our only needle-mover this week -- jumped from negative to positive (2 points) in our scoring, bringing our macro index back to zero. 

Morning Note: Risk and Reward go Hand in Hand -- Or -- Effectively Cocooned?

You guessed it, even though the major averages are giving some back this morning (ostensibly on COVID headlines), their degree doesn't do justice to the stink of the underlying breadth.

Thursday, January 21, 2021

Morning Note: "No new eras", when we're talking bubbles...

You're probably growing tired of my harping on how market internals (breadth in particular) remain anything but inspiring to start the year. 

Yeah, I wish it wasn't so, but we're here to see things as they are and invest accordingly.

Wednesday, January 20, 2021

This Week's Message: Plenty Bubbly

Stocks, for the moment, are liking the spending side of what the new administration would like to accomplish. At some point, however, they're going to have to process the taxing side

Morning Note: Morning Breadth -- And -- "Triumphal Linearism"

Yep, the calendar's turned and a new administration's assuming "power", however, on too many days in my view so far this new year the opening market action smacks of 2020.

Tuesday, January 19, 2021

Morning Note: Go Big!

"The market" (traders/investors in the aggregate) has seen incoming treasury secretary Janet Yellen's prepared remarks for today's presentation to congress, and it's liking her pleas to use the low interest rate environment to go big on borrowing and spending.

Monday, January 18, 2021

Morning Note: Uncommon Sense

In many of our client reviews we've been discussing the pent-up demand narrative that so pervades Wall Street think of late.

Friday, January 15, 2021

Macro Update (video)


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:

Morning Note: Takes time and discomfort for profits to stick...

Almost couldn't believe my eyes this morning when I read this quote from the latest commentary of a central banker:

Thursday, January 14, 2021

Financial Market Quote of the 21st Century

If you'll take the time to carefully read (not just my bolded lines) the excerpt below, think about it, digest it -- ask me questions about it to gain clarity if you like -- you'll begin to grasp what truly underpins the market action that seems so nonsensical to so many tutored, experienced investors. 

Morning Note: Bull Market Euphoria, $2 Trillion -- And -- The Fed Don't Do "Falsification"

965,000 folks filed "first-time" unemployment claims last week, which was close to 200k above expectations. Another 284k filed initial claims on the Pandemic Unemployment Assistance program; 161k was the estimate.

And of course the stock market's rallying this morning!

Wednesday, January 13, 2021

This Week's Message: Tweaks to Come -- And -- Reiterating the Case for India

Macro strategists/consultants Raoul Pal and Julien Brigden published their monthly call yesterday. 

Here's Pal on the current setup (in a nutshell) and how he's presently hedging:

Morning Note: Fed catching heat...

So the 6-day rally in interest rates looks like it won't make it to 7. 

Tuesday, January 12, 2021

Quote of the Day: Avoid Extremes!

Words of profound wisdom from Dave Rosenberg emphasis mine...

Morning Note: Funding all the fun...

I'll say it again, the U.S. central bank (the Fed) has backed itself into the worst of corners!

The 10-year treasury yield is up for the 6th straight day, and it's no wonder.

Monday, January 11, 2021

Quote of the Day: The True Picture of the "Labor System"

More on the epic mismatch between present levels of the stock market and the real economy from Forbes yesterday:

Morning Note: Watch the Dollar

The dollar is continuing what I'll call its oversold/short-covering rally to start the week, and this time stocks are somewhat acting accordingly.

Friday, January 8, 2021

Macro Update: Context

Nudged higher by purchasing manager surveys and the trend in outperformance of stocks over bonds, yet hindered by rail traffic, our proprietary macro index is yet again looking to peek above the zero line.

Quotes of the Day: Capitalism doesn't work without cost (or risk)

In yesterday's Wall Street Journal, former FDIC chair Sheila Bair accurately and succinctly assessed the bizarre financial landscape we find ourselves traversing.

Morning Note: Like Yesterday

So it's day two of Groundhog Day (the movie), although not as dramatically in terms of U.S. stock gains -- at least not at the open.

Thursday, January 7, 2021

Morning Note: Largesse

Stocks are off to another nice start this morning, although in concentrated fashion. 

While the S&P 500 is up 1.4% as I type, roughly 40% of its member companies are actually in the red. Utilities and consumer staples are heading lower; industrials and healthcare are relative laggards to start the day as well.

Wednesday, January 6, 2021

This Week's Message: Highlights From Our 2020 Letter

As is usually the case I have much queued up to share with you in our main weekly message. 

Having sifted through the data and macro commentary I found worthy to cite, I've decided to keep it in queue this week and instead offer up some highlights from our lengthy 2020 year-end message.

As much of it touches on/confirms much of what I have queued up to share.

Morning Note: The "Most Dependable Feature" of Bubbles

Well, the bond market isn't waiting for the one Georgia runoff left to call to be called.

As I type the 10-year treasury yield has thrust higher to the tune of 9.31%, breaching 1%, a level it hasn't seen in quite some time.

Tuesday, January 5, 2021

Morning Note: Diminishing Returns

Continued strong demand for goods -- no doubt capturing no small amount of what would've been spent on services absent COVID -- is keeping the manufacturing space humming along.

Monday, January 4, 2021

Chart of the Day: Commodities chart looks compelling...

Julien Brigden is at the top of my short-list of other macro strategists worth listening to.

I like that he sees and likes what we (fundamentally and technically) presently see and like:

Morning Note: The Fiction

The first trading day of the new year has seen the Dow move within a 400+-point range within the first hour. It's currently near the bottom of that range.

Saturday, January 2, 2021

PWA 2020 Year-End Letter, Part 8: Conclusion

In this year's lengthy final letter we touched on the importance of tracking the trends and momentum in data versus in (or in addition to) stock prices. We tackled the debt bubble and how policymakers are working toward a Japan-like outcome. We explored the good, the bad and the ugly of the current stock market setup. We illustrated why we like commodities going forward. We broke the U.S. equity market down by sectors. And we explored a bit outside U.S. borders...

In this concluding Part Eight we'll take one more look at the current stock market setup, we'll ponder what a post-COVID economy portends, and we'll finish up with where we see true opportunity.

Friday, January 1, 2021


So I received an email this morning from a dear long-time client and friend, Gordon, that inspired me to jump right to my keyboard and, with permission, share it on this New Year's Day with clients and blog subscribers.  

Which, given other commitments today, may delay the grand finale to our year-end letter by a day or two...