Chart of the Day: Is this the beginning of something big in commodities?

Per today's chart, commodity cycles tend to be long-term affairs:

Macro Update: Mixed Macro Messages, And a Quick Note on Today's Market Action

Our proprietary macro index continued its upside breakout this week, adding 8.17 points to its overall score, which now sits at +14.29:

Morning Note: "Tremendous Discipline" Required

Massively oversold treasuries are rallying, yields tanking (whew!) mightily, as I type this morning. And, therefore, after their mini bloodbath, interest rate sensitive tech stocks are rallying nicely as well. 

While that's enough to goose the major averages (Nasdaq and SP500 in particular), given its heavy representation therein, tech is pretty much all that's working this morning.

Morning Note: Utterly Panicked Fed!

The headline that crossed my phone at the market open:

"S&P 500 falls after 10-year rate hits one-year high, tech stocks lead decline"

This Week's Message: Exploring the Pent-Up Demand Narrative, and What It Portends for Markets

Imagine, after being locked down now for nearly a year, the historic economic bounce we're going to see once -- when things really open up -- all of that pent-up consumer demand is unleashed! 

Throw in a few trillion of fiscal, and monetary, support, and, my goodness, stocks have got to absolutely soar!

Morning Note: Thinking About Popper

It's unusual for us to be featuring the boring 10-year yield chart so frequently here on the blog. Of course, as you've noticed, things have gotten a bit lively there of late.

Quick take from our research thread... And a bit more on this morning's action...

This morning I copied and pasted into our internal research thread a blurb that mentioned a just-placed $30 million 3-day bet on Tesla call options with a strike price of $700...

Here was Nick's response:

Morning Note: Seismic Activity Has Our Attention

As we've been pounding for months, stocks, in the aggregate, simply can't do rising interest rates.

And, well, contrary to popular opinion of late, they simply can't stay loftily afloat forever either.

Morning Note: So What's Up With Stocks?

Hmm.... We know there are a couple $trillion worth of government gifts coming, including $1,400 direct to the person checks. And we know there's $3 trillion more coming relatively soon, in the form of infrastructure spending. 

Now that's the sort of news that had markets screaming higher last year, in the face of a global pandemic, no less.

Macro Update: Double Dip Off the Table, as long as...

In technical analyst jargon, our macro index has (per the graph below) broken through resistance (up 6.12 points this week) and successfully tested that line (now support) over the past three weeks, in continuation of the uptrend off of its June 2020 low. 

I.e., the macro backdrop looks encouraging, and, purely technically speaking, it may indeed have legs (although failed breakouts are common, regardless of the asset/index being analyzed):

Morning Note: Tyrannical Impulse

Deere knocked earnings out of the park (we like industrials right here!) and global manufacturing PMIs showed encouraging improvement overnight. "Stimulus" by the boatload is on its way and the new treasury secretary keeps saying that we simply can't go too big on government spending going forward, "now's the time!"

Uh oh!!

Quote and Chart of the Day

Economist Peter Boockvar sympathizes with our position on the relationship between interest rates and equities, and on what higher rates portend with regard to the present overall debt setup.

From his note this morning:

Morning Note: The Irony

Man, the irony, for the moment, is thick... 

Aside from the disappointing jobless claims number this morning, the outlook for the economy is borderline giddy -- yesterday's retail sales number (yes, those $600 stimulus checks got spent), and the projected GDP bounce to come (off of a ghastly year-ago low of course), has Wall Street salivating. Yet, stocks are looking more and more fragile as the days wear on... Hmm...

Morning Note: What a Good Setup Looks Like

Just a quick note this morning; our main weekly message coming your way later today...

So, way stronger than expected retail sales reported for January, and, well, stocks are taking a hit this morning... Yep, stocks are trading these days on the prospects for stimulus, and good news of course doesn't stimulate the need for stimulus... I've seen this before, by the way...

This Week's Message: Latest thoughts on 2021's prospects...

There’s literally zero doubt in my mind that we are in a classic stock market bubble, particularly in the high flying growth names; Tesla stands out, to put it mildly.

Now, that's "my mind" I'm talking about. Clearly, much of Wall Street, and most of Main Street, disagrees with me. And, frankly, being in a bubble does not mean that there are no legitimate opportunities to exploit in markets... It's all about how you go about it...

Morning Note: The Problem With Higher Yields

Treasury yields are spiking big this morning as the world anticipates a robust mix of growth and inflation over the coming months. 

14 Things You Must Believe To Believe It's Different This Time

Just a little thinking out loud... well, on my keyboard... this morning...

Now, don't get me wrong, this market has momentum, more stimulus is coming, the service sector will bounce back, the Fed will suppress the yield curve if/when interest rates get out of hand, and so on... Therefore, trying to time the end of this mania is a fool's errand...

But still...

Macro Update: Back to Flat

 Well, back to zero this week for our macro index:

Morning Note: If Only...

Quick note this morning (this time I mean it); will circle back later today with our weekly macro update.

Quote of These Times

Here's macro guy/Bloomberg opinion columnist/author and host of a popular market podcast, Jared Dillian, on Twitter this morning:

Morning Note: Pain is Essential!

I'll keep this morning's note quick; this week's main message will follow very shortly...

This Week's Message: Just a Few Thoughts on Wall Street and the Fed

First, before I dive into what I'm thinking about what I'll call Wall Street's current base case, allow me to point out that we are actively investing in equities on behalf of our clients. I'll circle back later in this missive with more specifics...

Morning Note: Dude!!

The January CPI numbers were released today, and, well, as you should expect (see last week's macro update) the price of stuff (goods) is rising...

Morning Note: "Can the Fed Circumvent Human Nature?"

Clearly, judging by the latest price action, traders/investors anticipate great things from the great amount of continued government stimulus to come.... Plus, and this is a big plus, it's going to be so great that they see it ultimately sparking a not-small amount of inflation in the process.

Keep Your Wits About You!

Pressed for time this weekend, so forgive me if I miss a proper edit here and there... But I woke up this morning feeling a strong desire to write the following...

Macro Update: Finally Back in the Green (albeit barely) -- And -- On Jobs and Stocks

Finally, after 15 months without a positive overall score, our proprietary macro index peeked its nose above the zero line this week, albeit barely, coming in at +2.04:

Morning Note: Contagious...

We'll stick mostly to numbers this morning; our macro update, coming your way later today, will have more meat to it.

Yes, stocks have had a very good week (following the opposite last week) as the powers-that-be are deploying their once-a-year (although they can use it twice this year, as it wasn't utilized in 2020) privilege ("budget reconciliation") to pass their COVID relief bill with a mere simple majority. 

This Week's Message: I'm Talking Risk, Not Timing

Sitting here, sifting through the plethora of data, etc. I've accumulated over the past week for the purpose of penning this particular message, I find myself needing to reiterate that (as long-time clients and readers know) I'm anything but a gloomy Gus by nature. It's all about how the pieces (from economic data, to Fed policy [and practice], to valuation, to the fundamental and technical setups across major asset classes, to sentiment, and so on) all presently fit together.

Morning Note: A Hallmark of Every Bubble

As I continue to stress, two things financial markets (in the aggregate) can't live with going forward are higher interest and a rising dollar.

Morning Note: What Laxity Breeds

On the surface, earnings reporting season has been nothing short of impressive thus far. Under the surface.... well, it's all about results relative to expectations leading in. And, as you might imagine, Q4 2020 expectations, relative to where they were a year earlier, had been cut, notably. 

Morning Note: "Confusion Is Our Salvation"

Interest rates and the dollar are up, stocks are up, yesterday's darling, silver, is tanking and, just an FYI, last week's darling GameStop is getting demolished -- as I type.

Morning Note: Not the silver "short squeeze" you might think...

Sliver is all the rage this morning, as the retail trader -- specifically the one who chats on Reddit and trades, or used to trade, on Robin Hood -- is, either through his/her own perceived genius or, ironically, through the discrete egging on by elements he/she is otherwise committed to destroying, is attempting to squeeze the price of the metal (and the funds that track it) higher, and themselves richer in the process.