Wednesday, December 15, 2021

Morning Note: Quite the Pickle

Fed Chair Jerome Powell finds himself in quite the pickle this afternoon: In his post-meeting press conference -- after the delivery (at 2pm Eastern) of a decision to keep the Fed funds rate pegged between 0 and .25% for the time being and (odds favor) to speed up the pace at which their tapering back monthly asset purchases -- he'll be efforting to not crack the equity market with his newfound resolve to tackle (well, let's say to "address") inflation.

What makes today particularly challenging is the latest dire prediction/warning that, based on present infection rates, the US may very well be facing a triple whammy of surging Omicron, Delta and cases of the flu come January.

So, does he walk back the whip inflation rhetoric amid rising COVID risks -- knowing that if indeed things get bad Washington will likely come to the rescue with yet more direct-to-consumer transfers; thus, ultimately, exacerbating the inflation pressures that the Fed's ostensibly struggling to catch up to? Or has the Fed concluded that it is indeed time to let some air out of the equity bubble, risking what could turn out to be a stretch of more meaningful downside action -- and economic fallout -- than they bargained for?


Asian equities leaned red overnight, with 9 of the 16 markets we track closing lower.

Europe's struggling a bit as well so far this morning, with 10 of the 19 bourses we follow trading down, as I type.

US major averages are off across the board: Dow down 120 points (0.34%), SP500 down 0.31%, SP500 Equal Weight down 0.48%, Nasdaq 100 down 0.44%, Nasdaq Comp down 0.59%, Russell 2000 down 1.12%.

The VIX sits at 22.90, up 4.61%.

Oil futures are down 1.58%, gold's down 0.10%, silver's down 1.45%, copper futures are down 2.92% and the ag complex is down 0.36%.

The 10-year treasury is flat (yield flat) and the dollar is up 0.02%.

Led by AMD, healthcare stocks, carbon credits, utilities stocks and Asia-Pac equities -- but dragged by metals miners, MP (rare earth miner), ALB (lithium miner), Viacom and energy stocks -- our core portfolio is off 0.45% to start the session.

Economist and investment guru John Porter, in an interview featured in Steven Drobny's outstanding read Inside the House of Money, reminds us that smart investing is never about chasing markets:
"The key over time is to have the discipline to capitalize on your successes and minimize your mistakes because, ultimately, the game is about preservation of capital."

Have a great day!

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