Friday, July 9, 2021

Morning Note: "The Summation of Wisdom"

Given China's posture lately toward its own (publicly listed Chinese companies seeing intense scrutiny and hamstringing restrictions), not to mention Xi's utterly belligerent tone toward the rest of the world of late, one might think that the country is suddenly willing to allow its securities markets (not to mention its economy) to suffer for the good of the empire.

Well, we should remember that the Chinese citizen is no longer a serf at the mercy of his/her master. He/she is indeed a force to be reckoned with -- within China!


"After the State Council exhortation to allow credit growth to ramp back up again yesterday, the PBoC cut the required reserve ratio for major banks from 12.5% to 12.0%. The central bank estimates that will free up ~$154bn in lending power." --Bespoke Investment Group

China being the world's second largest economy... well... let's just say that global markets -- in the face of serious COVID headwinds -- have (so far) responded favorably to that news. Our emerging market, Asia-Pac and Eurozone positions (tough places to be lately) are all up over 1% early in the session.

3 of the 16 Asian markets we track were shuttered overnight. Of the remaining 13, 8 finished the session in the red.

Europe's in rally mode this morning, with all but one of the open bourses (3 are also closed today) in the green as I type.

US major averages are, save for tech stocks, trading higher this morning: Dow up 335 points (0.98%), SP500 up 0.64%, SP500 Equal Weight up 0.97%, Nasdaq 100 down 0.07%, Nasdaq Comp up 0.18%, Russell 2000 up 0.99%.

The VIX (SP500 implied volatility) is down 9.32%. VXN (Nasdaq 100 i.v.) is down 6.02%.

Oil futures are up 1.37%, gold's up 0.09%, silver's up 0.21%, copper futures are up 1.58% and the ag complex is down 1.41%.

The 10-year treasury is down (yield up) and the dollar is down 0.22%.

Led by KRNB (carbon credits), banks, metals miners, Eurozone and Asia-Pac equities -- but dragged by solar stocks, wind stocks, MP (rare earth miner), tech stocks and ag commodities -- our core portfolio is up 0.87% to start the day.

There's thinking, then there's thinking (over-thinking) when we're talking investing. The latter can be the result of living emotionally with the short-term fluctuations of markets. And, as you might imagine -- per Jesse Livermore's admonition to sit tight when you've done the macro work -- that (reacting to over-thinking) can result in consequentially negative (longer-term) outcomes. 

With that in mind, here are two quotes from Will Durant's life work, The Complete Story of Civilization (I've made the personal commitment to read it start to finish [i.e. simply the reading of it (10k pages) may end up being my life's work]):

"Not to think unless we have to -- there is much to be said for this as the summation of wisdom."

"...when fear is overcome, curiosity and constructiveness are free, and man passes by natural impulse towards the understanding and embellishment of life."

Have a great day!

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