Monday, December 6, 2021

Morning Note: Soft News is Good News

In yesterday's video commentary I pointed to a technically constructive immediate-term setup for US stocks.

Looks like, at least at the start this morning, it's playing out as the charts suggested. 

If, however, this morning's rally loses its oomph by day's end (not a prediction, btw), I suspect it'll be around the spike we're seeing in yields doing a number on the tech sector in particular (similar to some of last week's intraday action). That said, early anecdotal evidence around the Omicron variant suggests that it, while being seriously transmissible, may be less severe in its effects on the victim vs others -- clearly we're seeing that hope playing out in small caps as I type.

Our European equity exposure is up nicely this morning, despite reports of a 6% plunge in October factory orders for Germany. Of course there's a narrative that explains all things constrained these days, but I think we can also suffice to say that any news that may support soft hands among central bankers is welcome to equity markets -- these days

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

Europe's mostly green this morning, with 16 of the 19 bourses we follow trading up, as I type.

US major averages are higher across the board: Dow up 575 points (1.67%), SP500 up 0.98%, SP500 Equal Weight up 1.57%, Nasdaq Comp up 0.36%, Nasdaq 100 Index up 0.16% (tech lagging), Russell 2000 up 1.60%.

The VIX remains elevated at 28.83, down 6.0%.

Oil futures are up 2.60%, gold's down 0.11%, silver's down 0.89%, copper futures are up 0.82% and the ag complex is down 0.05%.

The 10-year treasury is down (yield up) and the dollar is up 0.19%.

Led by banks, oil services stocks, carbon credits, utilities and consumer staples stocks -- but dragged by AMD (chip maker), ALB (lithium miner), uranium miners, SOXX (chip makers) and Indian equities -- our core portfolio is 0.37% to start the day.

Just saying (well, quoting):

"Although only a few observers have noted the vested interest in error that accompanies speculative euphoria, it is, nonetheless, an extremely plausible phenomenon.

Those involved with the speculation are experiencing an increase in wealth—getting rich or being further enriched.

No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition.

The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved."
--Galbraith, John Kenneth. A Short History of Financial Euphoria 

Have a great day!

P.s. This week will be light on commentary. I'll be out of touch from Thursday to next Monday. 

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