"Generally, the higher prices we’re seeing are related to the supply and demand imbalances that can be traced directly back to the pandemic.""But it’s also the case that pricing increases have spread much more broadly in the recent few months."
"...it's time to retire the word "transitory" regarding inflation."
One might conclude that making such a declaration amid rising COVID uncertainty means the Fed is actually willing to let a little air out of the equity market bubble.
Time will tell...
Equity futures last evening quickly moved from nicely red to notably green upon Moderna's CEO telling the Financial Times, with regard to the existing vaccine efficacy related to the latest COVID variant:
As I type, the Dow's shaved a 300-point opening rally by two-thirds, while metals and materials (and their related companies) and global equities, while generally higher, lag notably... US consumer staples, industrial and financial stocks are actually in the red so far this morning.
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:
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:
While you'd expect quiet on the day before Thanksgiving, well, definitely not -- in terms of the number of data releases -- on the economic front.
Here' I'll try to sum much of it up:
As clients and long-time readers know, we do a great deal of deep ongoing analyses in our effort to ensure that our client portfolios reflect what we believe, in the aggregate, is the best overall risk/reward setup. That process -- which includes both fundamental and technical analysis across asset classes, sectors, regions, politics, geopolitics, etc. -- over the years has led us to creating proprietary indicators in areas such as the macro economy, financial stress and investor sentiment.
The Biden Administration announced this morning the re-nomination of Fed Chair Jerome Powell. In that, as they say, equity markets detest uncertainty, headlines suggest that Powell's extension entirely explains a nice pop in the US major averages so far this morning.
From our morning note:
"...suffice to say that a truly healthy market setup is generally one where most boats are rising with the tide. Poor breadth suggests that a given index is being propelled by a concentrated group of members. I.e., stress in a single stock, or a mere handful of stocks, can send an entire index reeling. Which was a much-documented phenomenon that preceded the bursting of the late-90s tech bubble."Just ran across this from Semper Augustus President and CIO Christopher Bloomstrand:
While there's much macro in the world to touch on, we'll save it for this weekend's update and focus briefly this morning on the recent troubling trends in stock market breadth.
Let's just say that while seasonality right here inspires legitimate near-term bullishness, the breadth readings pose a headwind to that sentiment.
Judging by the volatile level of hits volume we're seeing on our daily blog posts it's clear that catchy titles and/or tantalizing teasers tend to capture far more attention than those that come across more or less ho hum. Thing is, it's often those with less-enticing titles/teasers that contain some of the most important messaging that we really want clients taking in.
So, with that in mind, we're going to make a weekly habit out of offering up highlights (with links) from the prior 7 days of messaging that capture what we believe to be the important point(s) of the prior week.
Here you go:
Along with our own macro and financial stress indices we maintain another barometer that tracks investor sentiment. Long-time clients and readers will recall many "side-of-the-boat" references made herein over the years. I.e., we try to discern when there's a crowding on either the bull or the bear side of the boat, as, when either nears an extreme, there's heightened risk that the boat will begin to take on water, sending the crowd, in a blind panic, sprinting to the other side.
Overnight and early morning data releases show a generally mixed overall macro setup that we'll tackle in this week's macro update.
In the meantime, here are your morning numbers followed by a telling technical market update that I shot last night:
Here's the monthly change in consumer revolving debt. Note the big jump in credit card usage over the past few months vs the 2 years+ of frugality following the 2008 recession:
Here's Bespoke Investment Group's intro to their market commentary this morning (I'll bold the part that jibes with the macro update I sent out over the weekend):
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:
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:
We'll update you on the macro in quick and easy fashion this week.
Our proprietary index gained 2.08 points, for an overall score of +20.83:
In yesterday's technical market update, subtitled "Why We "Technically" Like Japan Right Here" I suggested that we'll likely see increased fiscal activity in Japan going forward.
Here, coincidentally, is BCA Research making that point today:
This morning's job numbers did not disappoint!
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:
In a technical look at the market video I shot yesterday morning (sending the finished product to you shortly), I mentioned the bullish seasonality that takes us to the end of the year, then intimated that the calendar turn may usher in a more difficult period for stocks.
So, we've been hearing, seems like day after day, that the stock market -- i.e., the Dow or the S&P 500, or both -- keeps hitting new all time highs. Client after client during our review meetings mention it, with most (our clients are by and large a "mature" bunch) following with a concerning "something's gotta give", or words to that effect...
A few key highlights from the ISM's October Purchasing Managers Survey:
“Business Survey Committee panelists reported that their companies and suppliers continue to deal with an unprecedented number of hurdles to meet increasing demand. All segments of the manufacturing economy are impacted by record-long raw materials lead times, continued shortages of critical materials, rising commodities prices and difficulties in transporting products.
Japan, whose equities occupy ~60% of our developed Asia-Pac exposure -- and who presently represents the top foreign country weighting in our core portfolio -- saw election results yesterday that preserved an outright majority for its recently minted Prime Minister Fumio Kishida. Consequently, the country's stocks rallied 2.61% overnight.
