Traders seem a bit jittery as we start the week. Gold's rallying (+1.25%) and the VIX (goes up when options traders hedge, or speculate on, the downside) is up 6%. Oil futures were up bigly in the premarket -- on news that OPEC talks broke down over the weekend -- although they've done a complete 180 since (down 0.40% as I type). Emerging markets are taking a hit, as China hits its own tech sector for not toeing the China line, and rising COVID cases are clearly a concern. And, to aptly top it all off, the S&P 500 itself (with its highest weighting to tech stocks since 1999 [if not ever]) is barely lower while its individual losers lead its gainers by nearly 3 to 1 (oof!, if tech ever takes a serious breather)... The S&P 500 Equal Weight (treats all equally) was down 5 times the cap weighted index at the open.
Asian equities leaned green overnight, with only 4 of the 16 markets we track closing lower (3 were closed).
Europe's mostly higher so far this morning, with 11 of the 19 markets we track trading up (1's closed).
U.S. major averages are mixed (although the Russell's getting creamed): Dow down 168 points (0.48%), SP500 down 0.21%, SP500 Equal Weight down 0.89, Nasdaq 100 up 0.27%, Nasdaq Comp up 0.08%, Russell 2000 down 1.25%.
The VIX (SP500 implied volatility) is up 6.10%. VXN (Nasdaq 100 i.v.) is up 6.48%.
Oil futures are down 0.29%, gold's up 1.28%, silver's up 0.20%, copper futures are up 0.89% and the ag complex is down 2.32%.
The 10-year treasury is up (yield down) and the dollar is up 0.02%.
Led by gold miners, gold, tech stocks, wind stocks, silver and MP (rare earth miner) -- but dragged notably by oil services stocks, Viacom, ag futures, KRBN (carbon credits) and Latin American equities -- our core portfolio is off 0.55% to start the session.
I'll close this morning with two quotes from my weekend reading that I happen to sympathize with. The first, from premium research provider Variant Perception, speaks to recent weakness in the cyclical space. The second, from the FT, speaks to our longer-term thesis on the dollar, and, hence, inflation:
"Cyclical assets have been losing momentum as yields and term premium have started grinding lower. Nothing moves in a straight line and we see this as a counter-trend move that is necessary given the extremes in consensus reflation news stories, which we highlighted in March, noting that markets are due for some short-term consolidation before the next leg higher."
"Booms are often killed by complacency, which grips the US now. Significant voices in both political parties have argued that America should continue to borrow and spend freely, thanks to the unrivalled status of the dollar as the world’s most wanted currency.
But easy money flowing out of the Fed is threatening to weaken the dollar and feeding the rise of zombies — companies which earn too little to make even interest payments on their debt. They barely existed in the US 20 years ago, but accounted for 6 per cent of listed companies by 2010, and almost 20 per cent by last year."
Have a great day!