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. 

We do remain bullish on oil well into the future, but I suspect it'll be a somewhat bumpy road from here. We went ahead and booked some profits in the space over the past couple of weeks. Still own plenty...

News out of Japan has it that a previously threatened cap gains tax increase isn't going to happen. Hence, our Asia Pac ETF is up nearly 1% on the morning. Also, Japanese machine tool orders (preliminary) -- considered a tell on global macro conditions -- rose at their fastest pace since mid-2018 (HT Bespoke Investment Group).

Big week for bank earnings this week... Stay tuned...

Asian equities were mixed overnight with 7 of the trading (2 were closed) 14 markets we track closing lower.

Europe's struggling this morning, with 11 of the 18 trading (1's closed) markets we track trading lower, as I type.

U.S. stocks are green to start the day: Dow up 175 points (0.50%), SP500 up 0.43%, SP500 Equal Weight up 0.46%, Nasdaq 100 up 0.43%, Nasdaq Comp up 0.41%, Russell 2000 up 0.49%. 

The VIX sits at 18.78, up 0.05%

Oil futures are up 2.77%, gold's up 0.06%, silver's up 0.48%, copper futures are up 2.39% and the ag complex is down 0.41%.

The bond market's closed for Columbus Day. The Dollar's up 0.07%. 

Led by solar stocks, metals miners, MP (rare earth miner), KRBN (carbon credits) and base metals futures -- but dragged by AT&T, wind stocks, Verizon, utilities stocks and ag futures -- our core portfolio is up 0.55% to start the session.

Here's an excerpt from Jack Schwager's essential book Hedge Fund Market Wizards that speaks to the long-term discipline (read patience) that defines history's best investors:

"You don’t have to be a brilliant economist; you just have to recognize when something matters. The financial crisis is another example of the need to wait for the right time. During 2006 to 2007, I was thinking the markets were in a completely unsustainable bubble. It was ridiculous. You saw insanity everywhere."

"How then did you position yourself during 2006 and 2007?
We recognized that we would underperform the bulls by quite a bit because in a bubble the true believers will always win. That’s fine. You just need to make decent returns and wait until the market turns. Then you can make great returns. What I believe in is compounding and not losing money."

Have a great day!

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