Morning Note: Many Are Learning the Wrong Lessons, I Fear!

In yesterday's video commentary I mentioned the lack of capacity buildout in the oil space. Chevron and Exxon both reported Q1 earnings this morning; Chevron said it reduced its spend on large development projects, which resulted in a notably higher-than-anticipated cash flow number. While analysts had expected Exxon to announce a sizable capex cut, the company reported no change. However, it did announce that excess cash flow going forward will be used to pay down debt (i.e., less going forward to go toward expanding capacity).

I may expand on energy sector dynamics in this week's macro update (coming your way likely today).

Economist Dave Rosenberg more or less echoed something else I mentioned in yesterday's video. 

From his morning note:

"The problem is that we have a lot of people playing the market who have no sense of history. They likely are in for a big surprise, but that awaits the fiscal cliff to take hold in the second half of the year."

This was my comment:

"...the players in today's market, many who are moving prices, seem to be only focused on prices. That sends signals, gets people thinking things, status quo bias begins to take over, and people can make what are ultimately big mistakes as they make money while taking bad shots.

Now, I act as if I know that this is going to end badly, I don't. I just am assessing risks and probabilities."

Asian equities had a rough go of it overnight, with all but 2 of the 16 markets we track closing lower.

Europe's mixed this morning, with 9 of the 19 bourses we follow lower as I type.

U.S. major averages are red to start the day: Dow down 182 points (0.53%), SP500 down 0.51%, SP500 Equal Weight down 0.52%, Nasdaq 100 down 0.38%, Nasdaq Comp down 0.26%, Russell 2000 down 0.15%.

The VIX (SP500 implied volatility) is up 3.98%. VXN (Nasdaq 100 i.v.) is up 4.55%.

Oil futures are down 2.37%, gold's down 0.31%, silver's down 0.25%, copper futures are down 0.01% and the ag complex is down 0.55%.

The 10-year treasury is up (yield down) and the dollar is up a big 0.47%.

Our only core positions in the green to start the day are metals miners, uranium miners and ALB (lithium miner). The biggest losers are solar stocks, MP (rare earth miner), oil services stocks, energy and emerging market stocks. All in, we're off 0.53% as I type.

The following from Annie Duke's exceptional book How to Decide speaks of course to life, but my how it speaks hugely to what I view as proper investment-"thinking" as well. It jibes with my own comment shared above:

"Because there are only two things that determine how your life turns out: luck and the quality of your decisions. You have control over only one of those two things."

"In every domain, the outcome tail is wagging the decision dog. There’s a name for this: Resulting."

"Resulting: A mental shortcut in which we use the quality of an outcome to figure out the quality of a decision."

"A necessary part of becoming a better decision-maker is learning from experience. Experience contains the lessons for improving future decisions. Resulting causes you to learn the wrong lessons."

Have a great day!
Marty