Thursday, October 21, 2021

Quote of the Day

The following blurb from BCA Research yesterday comports to a virtual T with our go-forward macro thesis related to equities and, per the last sentence (although for add'l reasons), the dollar -- and, thus, with our present on balance positioning:

Morning Note: Managing Positions

Like I said yesterday, the setup for inflation, and, nearly by default, commodities, is resoundingly bullish well into the foreseeable future. I also said that as investors embrace that sentiment, related markets will get ahead of themselves and correct, at times "violently."

Wednesday, October 20, 2021

This Week's Message: Recent profit-taking notwithstanding, we remain long-term bullish on inflation, energy, and the rest of the commodities complex...

As clients and regular readers know, our under-the-surface view of global general conditions has it that inflation going forward will be, let's say, more than it's been the past several decades.

Morning Note: Whole Lotta Hedging Going On

As you may have noticed, September was relatively tough on the stock market:

Tuesday, October 19, 2021

Technical Stock Market and Dollar Update (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: So Far So Good

One of our concerns heading into this earnings season was the extent to which rising input costs would do a number on corporate bottom lines and forward guidance, and, thus, on stock prices.

Monday, October 18, 2021

Morning Note: The Fed's Well-Founded Fear

The 2-year treasury yield (in orange below) -- a presumed harbinger of Fed funds rates (white line) to come -- is suggesting that the Fed is not far away from doing more than simply tapering its monthly bond purchases:

Sunday, October 17, 2021

Macro Update: Sentiment, Sectors, Metals and More (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:


Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

*CFO Survey charts courtesy of Bespoke Investment Group...

Friday, October 15, 2021

Morning Note: Friendly for stocks, not so much for bonds -- And -- The trouble with trying to time cycles...

Please pardon my cynicism, and we do like banks right here, but when the powers that be engage in what ultimately amounts to the pumping of unthinkable liquidity into the financial system (read markets), well, yeah, you're going to see news lines like this following a Goldman Sachs' earnings announcement:

Thursday, October 14, 2021

This Week's Message: Highlights

We'll make this week's main message a highlight fest from our past week of messaging:

Morning Note: Producer Prices Please, However... -- And -- "Systems Thinkers"

Positive earnings news and lower than expected jobless claims, along with tamer than expected producer price inflation has equities adding onto what was already a strong rally in the futures pits.

In terms of the economic data, the jobless claims of course make perfect sense; remember, the U.S. presently sports over 10 million job openings. As for the producer inflation data, well, that's a bit more nuanced.

Wednesday, October 13, 2021

Morning Note: Yeah, inflation...

Inflation, per this morning's CPI print, is running hotter than economists predicted, but certainly not hotter than you and I are feeling. But, hey, maybe not... I mean J. Powell did say inflation is concentrated in just a few select areas.

So, if we ex-out, umm, well, like everything, we're good. 

Tuesday, October 12, 2021

Morning Note: Sentiment is Waning -- And -- Flexibility is Key!!

Suffice to say that, while we see low recession odds on the foreseeable horizon, overall economic sentiment is clearly waning.

On the global front, the IMF published its latest World Economic Outlook this morning.

Here's the intro:   emphasis mine...

Monday, October 11, 2021

Morning Note: Oil's Up, Japan's Cap Gains Tax Isn't -- And -- What Defines History's Best Investors

With the bond market shuttered and no major data releases or earnings reports this morning, there's not much to cover on this side of the pond.

Well, then again, there is the price of oil, which now fetches over $80/barrel! We've mentioned plenty herein how there simply won't be the expansion of fossil fuel production capacity that $80 and a growing global economy might otherwise inspire. That said, there are for sure plenty of existing wells that can be turned back on as, yes, there's money to be made at $80. Baker Hughes just reported the 5th week in a row of rising rig counts, and we should expect refining capacity to expand (come back) going forward, coming off of hurricane and, not to mention, COVID constraints. 

Sunday, October 10, 2021

Quotes of the Day -- And -- An Important Technical Market Update (video)

Yesterday evening I listened to the latest Grant Williams and Bill Fleckenstein "End Game" podcast; their guest was Simplify Asset Management's Harley Bassman.

While I didn't necessarily agree with all of Harley's assertions, I nevertheless found him to be an exceedingly sharp, very deep thinker on markets.

The following exchange resonated with me; i.e., with my view of present Fed policy and the hazardous setup it engenders:

Saturday, October 9, 2021

Macro Update: A Challenging Setup

An uptick in the JPMorgan Global Composite PMI (Purchasing Managers Index) has our macro index back above 20 this week (20.85).

Friday, October 8, 2021

Morning Note: At Second Blush -- And -- It's About What You're Wearing

At first blush this morning's jobs number looked like a big bust; 194k net jobs added vs 500k expected. 

At second blush, however, it was fine: 

Thursday, October 7, 2021

Quick Market Note

I'm unexpectedly on the road today, so I wasn't in a position to offer up the usual morning note.

As I suspect you noticed, equity markets staged a nice rally today that was essentially follow through on yesterday's bounce; that by all appearances was inspired by some political give on the debt ceiling. 

Wednesday, October 6, 2021

This Week's Message: Base Case Intact, Artificiality -- And -- Seasonality In Play

In yesterday's video commentary I finished with: 

"...we have huge opportunities relative to our longer-term weaker-dollar/inflationary thesis that we think are going to play out nicely over the next few years. Next few weeks and months? I dunno..."

I.e., while we fully anticipate intense (at times) volatility across, for one, our commodities exposures, our base case relative to what are slow supply responses to increasing pricing dynamics remains very much intact.

Morning Note: That "Distribution" Feel

Interesting action so far this morning. Overnight, as equity futures were melting down, headlines suggested it was all about rising interest rates and energy prices. However, before we made it to the cash session, interest rates turned negative and energy prices, nat gas in particular, utterly plunged. And, while off their lows (in the U.S.) stocks are still struggling notably.

Tuesday, October 5, 2021

Technical Market Update (video)

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:


Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: There's Worry Afoot

In our portfolio discussion yesterday Nick and I pondered the coming earnings season. The key question: How are companies going to handle their forward guidance when so many are hamstrung by lack of necessary materials, components and such?

Monday, October 4, 2021

Morning Note: Q4 is largely about political calculation...

As we enter what is typically the best quarter for equities, market actors worry over the outcomes of what are, at this juncture, essentially little more than political calculations.

Friday, October 1, 2021

Macro Update: "Transitory" Losing Traction -- And -- Recession Risk is Not An Issue Right Here...

Quick update this week.

Our macro index moved down a titch with just one input (durable goods orders ex-transportation) changing score (positive to neutral).

Morning Note: Our Current Game Plan

Equities (in the pre-market) were looking to extend their selloff into October when Merck announced positive test results on its oral anti-viral COVID treatment. Apparently sparking a notable move from red to green in futures.

So, we'll see, the pattern of late for U.S. equities has been one of deterioration as the trading day wears on.