Monday, November 1, 2021

Morning Note: Really Liking This Chart! -- And a Must-Read Quote

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.

This is a 40-year chart (of the MSCI Japan Index) that I'm really liking right here. While my few annotations will give you a clue as to why, we'll explore this one in detail in this week's technical update video:

A big week this is: 
  • House Democrats are saying that they'll have their tax and spending package passed tomorrow. 
  • The Fed, the Bank of England (BOE) and Reserve Bank of Australia (RBA) all hold policy meetings this week. The BOE is actually talking rate hikes, of all things (you'd think they're worried about inflation... go figure!). The RBA shocked the world last week by essentially abandoning its yield curve control, which resulted in a literal sky-rocketing of their 2-year note yield. 
  • ISM Manufacturing Index reports today, the Services version on Wednesday
  • The Jobs number on Friday!
  • And a number of other important global data releases throughout the week.
Stay tuned...

Asian equities leaned slightly green overnight, with 9 of the 16 markets we track closing higher (again, Japan notably).

Europe's very green this morning, with all but 1 of the 19 bourses we follow trading up, as I type.

U.S. major averages are mixed: Dow up 31 points (0.09%), SP500 down 0.09%, SP500 Equal Weight up 0.41%, Nasdaq 100 down 0.26%, Nasdaq Comp up 0.04%, Russell 2000 (small caps) up a big 1.78%.

The VIX sits at 17.17, up 5.66%.

Oil futures are up 1.11%, gold's up 0.61%, silver's up 0.72%, copper futures are down 0.35% and the ag complex is up 1.24%.

The 10-year treasury is down (yield up) and the dollar is down 0.09%.

Led by Viacom/CBS, uranium miners, oil services companies, bank stocks and ALB (lithium miner) -- but dragged by Nokia, base metals futures, KRBN (carbon credits), tech stocks and Mexican equities -- our core portfolio is up 0.52% to start the day.

Colm O'Shea's interview from the Jack Schwager's excellent Market Wizards series has to be my favorite:
"If you live in a world where everyone assumes that everything goes up forever, then it is inconceivable that prices might go down. Big price changes occur when market participants are forced to reevaluate their prejudices, not necessarily because the world changes that much. The world really didn’t change that much in 2008. It was just that people finally noticed there was a problem. 

Consider the current U.S. debt problem. A lot of people say there is apparently no inflationary threat from the growing U.S. debt because bond yields are low. But that’s not true. Bond yields will only signal that there is a problem when it is too late to fix it."

Have a great day!

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