Between the Lines: Highlights

Thursday, November 18, 2021

Highlights

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:

From this morning:

"...while I wouldn't say that the bull side is dangerously crowded, over the past few weeks our indicator has gone form essentially neutral to a bit of a lean in that direction.

Our scoring of sentiment across the options market, short interest readings across major averages, futures traders positioning, newsletter writers and individual investors nets a current -18.18. -100 would denote maximum greed.

So, again, nothing to get too excited over, but it does hint to what I'll call growing complacency."

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"...while, again, there's complacency in the air, I'm a little surprised the bullish mood isn't even giddier, given the season. However, like I've suggested in recent videos, I suspect the calendar turn may come with heightened anxiety..."

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"...here's one from a bearish author:
“There is a new champ! Rivian, the electric vehicle company that just came public on Wed, “is now the biggest US company by market value with no revenue.” “(It’s) seriously mind boggling when it hasn’t even earned any discernible revenue yet,” said the chief market analyst at a U.K.-based financial services company to Bloomberg. Mind boggling valuations are exactly what one expects at the end of a mania. The coming crash will be equally as mind boggling but for different reasons."
While I'm not bold enough to call a "coming crash", I indeed share the sentiment when it comes to the speculative fever that tends to accompany major market tops. Which explains much of our current core allocation, and the options hedging."

Tuesday:

"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:

Yep, it's way different this time!

Clearly, the above (the latest reading anyway) and this morning's positive retail sales numbers flies directly in the face of last Friday's dismal consumer confidence report.

Either, as they say, actions speak louder than words, or folks are simply spending it (their savings and space on their credit cards) while they got it. As I mentioned in our latest macro update, U.S. consumers presently sit on some $2 trillion of savings... well, I guess (per the retail numbers) they're not exactly "sitting" on it these days.

With regard to credit cards, after the big paydown during the pandemic there's definitely more room to run going forward. And that, coupled with all of that savings, has some economists and market actors feeling pretty good about next year's prospects. Makes sense, but keep in mind, while all of that government largesse still sloshes through the system, there'll be no matching (not remotely) last year's injections..."

Monday:

"Our colleague Hari Krishnan in his latest, and excellent, book Market Tremors points to the very precarious corner the Fed finds itself in:
"Negative rates create dangerous incentives to agents who want to lever their portfolios to the moon. By contrast, raising rates from a 0% base by even a small amount can be destabilizing.""

And here are our video commentaries from the past week:

Tuesday's Technical Market Update: Stocks, Silver, etc.