Wednesday, September 29, 2021

Morning Note: Consumers Are Wondering -- And -- A Head-Tailed Cat

Treasury yields are taking a bit of a breather after seeing quite the spike over the past week or so.

10-year treasury yield index 5 day/5 minute chart:

No doubt the threat of somewhat tighter monetary policy has something to do with the recent rise in rates. 

In terms of the decline that began at 10am yesterday morning, well, it might have something to do with the 10am release of the Conference Board's consumer sentiment index. Which was down 4 points from the previous month, and notably missed expectations.

It, along with the University of Michigan's and Langer's consumer sentiment surveys comprise one of the 48 inputs to our proprietary macro index. 

Here's all 3:

Whether it's concerns around the Delta variant, inflation, or what have you, suffice to say that the consumer -- while his/her spending patterns are holding up -- is beginning to wonder...

Note: It would take quite the rally in stocks today and tomorrow for September not to run true to long-term form (typically down). As of yesterday's close the S&P 500 is down 3.76% on the month. Our core mix (which -- being globally macro driven -- is not tethered to US stocks these days, btw) is down 1.74% on the month

Asian equities were messy overnight, with all but 3 of the 16 markets we track closing lower. 

Europe's better so far this morning, with all but 3 of the 19 bourses we follow trading up, as I type.

U.S stocks are bouncing back off of yesterday's drubbing: Dow up 184 points (0.53%), SP500 up 0.56%, SP500 Equal Weight up 0.44%, Nasdaq 100 up 0.68%, Nasdaq Comp up 0.56%, Russell 2000 up 0.25%.

Oil futures are up 0.49%, gold's down 0.19%, silver's down 4.04%, copper futures are down 0.66% and the ag complex is up 0.05%.

The 10-year treasury is up (yield down) and the dollar is up a big 0.50%.

Led by utilities stocks, ALB (lithium miner), Latin American equities, staples stocks and AT&T -- but dragged notably by silver, MP (rare earth miner), base metals miners, uranium miners and base metals futures -- our core portfolio is up 0.06% to start the day.

Think about the bull and bear phases in market cycles, and about economic expansions and contractions as you read the following by Alan Watts:
"We believe that every thing and every event must have a cause, that is, some other thing(s) or event(s), and that it will in its turn be the cause of other effects. So how does a cause lead to an effect? To make it much worse, if all that I think or do is a set of effects, there must be causes for all of them going back into an indefinite past. If so, I can’t help what I do. I am simply a puppet pulled by strings that go back into times far beyond my vision. Again, this is a problem which comes from asking the wrong question.
Here is someone who has never seen a cat. He is looking through a narrow slit in a fence, and, on the other side, a cat walks by. He sees first the head, then the less distinctly shaped furry trunk, and then the tail. Extraordinary! The cat turns round and walks back, and again he sees the head, and a little later the tail. This sequence begins to look like something regular and reliable. Yet again, the cat turns round, and he witnesses the same regular sequence: first the head, and later the tail. Thereupon he reasons that the event head is the invariable and necessary cause of the event tail, which is the head’s effect.
This absurd and confusing gobbledygook comes from his failure to see that head and tail go together; they are all one cat. The cat wasn’t born as a head which, sometime later, caused a tail; it was born all of a piece, a head-tailed cat.
Our observer’s trouble was that he was watching it through a narrow slit, and couldn’t see the whole cat at once. The narrow slit in the fence is much like the way in which we look at life by conscious attention, for when we attend to something we ignore everything else. Attention is narrowed perception."

Have a great day!

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