Sunday, June 26, 2022

Economic and Stock Market Snapshot (video)

If, among other things, market action -- across equities (breadth readings in particular), commodities and fixed income -- is a fair harbinger of things to come, our mid-cycle slowdown thesis is simply wrong. I.e., markets of late — and much of the punditry who stake their claims of predictive prowess on them — are signaling recession is on the near-term horizon, if not already here. 

The fact that our model hasn’t yet placed us there of course doesn’t mean that it won’t very soon. But in that we’re not the least bit interested in being see-we-told-you-so heroes, we’ll simply wait till our work says simply that near-term recession odds trump continued expansion odds. The last time it did was in August 2019; recession followed 5 months later. 

So why doesn’t it now?

Here you go:

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Wednesday, June 22, 2022

Stock Market Snapshot, the Fed, Goldilocks, Non-Linear Inflation and the Latin America Setup -- all in 13 minutes (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Political Career Risk Rising -- And -- The Really Good News

Fed Chairman Jerome Powell addresses congress today and tomorrow with his team's current assessment of general conditions and their stance on go-forward monetary policy. 

While, given their all-out commitment (well rhetorically at least) to bringing inflation to its proverbial knees, one wouldn't expect much in the way of equity-market-friendly commentary right here from the Fed-Head.

But, then again, there's the likes of the following 4 charts:

Tuesday, June 21, 2022

Quote of the Season

The quote below expresses what I cherish as one of the most important lessons I've learned from my decades-long experience (most-humbling at times) as an investor, and advisor:

"...it’s important not to conflate easy heuristics or ideological bias with market outcomes as they frequently diverge sharply."

--Bespoke Investment Group 

Keep this one in mind as your head spins over the coming political season... 

Morning Note: Bear Market Rally Prospects

In yesterday's video commentary I offered a brief technical snapshot of the S&P 500 where the 60-minute chart pointed to the potential for short-term pop higher, plus a number of market indicators/setups that supported the notion that perhaps a "bear market rally" was in the near-term offing.

In case you missed it, here are a few key snippets from the market log I drew from in the video:

Monday, June 20, 2022

Bear Market Rally Prospects (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Friday, June 17, 2022

Economic and Stock Market Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Simmering Setups

So, suffice to say that the Bank of Japan (BOJ), by holding pat, didn't blow anything up overnight (other than [make that "down"]  the yen). But, make no mistake, this is a simmering macro setup that... well... continues to simmer with potentially meaningful global macro ramifications as it plays out.

Thursday, June 16, 2022

Morning Note: What Has Traders Fretting Right Here?

So, while that "coiled" feel in the SP500 60-minute chart that we explored in yesterday's video (shot early in the session) appeared prescient later in the day, suffice to say that, while the bounce resumed in early overnight trading (with S&P futures up another 1+%) -- upon the fears, followed by the facts, of foreign central banks hiking their own benchmark rates (Swiss Nat'l Bank for the first time in 11 years) -- well, let's just say that the spring snapped overnight. As I type the S&P is looking to give back nearly all of yesterday's gain at the open (in 45 minutes).   I'll of course wait till the open before penning part 2 (the opening numbers)...

Wednesday, June 15, 2022

Mid-Week Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: The Proverbial Inflection Point

So, with history as our guide, the degree to which fed funds futures are pricing in a .75% hike today virtually assures that that's precisely what J. Powell and team will deliver. Now, there are a number of pundits calling for something yet more aggressive, which I'm guessing is a non-starter, and, like I said yesterday, should they go .50%, then that says Monday's meltdown indeed rattled their nerves.

I.e., while indeed a plunging stock market would do some of the heavy lifting for them on inflation, it could also, reflexively-speaking, ultimately be the straw that breaks the economy's back, hence the Fed's potential nervousness... Call it the reverse wealth effect.

Tuesday, June 14, 2022

Morning Note: Does the Fed Still Have Feelings for Stocks?

In yesterday's note I placed less than 50/50 odds on the Fed raising its benchmark rate by .75% come tomorrow's wrap of their 2-day policy meeting. Well, the market says different.

Monday, June 13, 2022

Morning Note: Quite the week ahead -- And -- "There's thinking, then there's thinking"

Here's yesterday's entry to our internal market log:
6/12/2022
This coming week is going to be interesting, to put it mildly!

The calls for a 75bp fed funds hike this week in some circles are becoming deafening, despite the fact that Powell removed that one from the table last month. I suspect he’ll keep his word going forward and – assuming inflation remains slow to abate – opt for a longer string of 50bp bumps than previously expected.

Friday, June 10, 2022

Economic and Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: More On Those Underlying Forces

Well, nope, (headline) inflation did not peak in April after all, with May's headline print coming in at 8.6%, versus April's 8.3%. Ex out food and energy and "core" inflation came in at 6.0, which actually was a titch lower than May's 6.2%. 

While indeed stocks might've rallied on tamer numbers (they're falling as I type), and while I suspect we remain very close to peak inflation for this cycle, as we've stressed, the notion that it'll get to a level (without, that is, a near-term inflation-crushing recession) anytime soon that would have the Fed backing off is, in our view, quite the faulty notion. I.e., any such rallies in equities (and they will come, rest assured) given the present setup, and at present overall levels, would be, in our view, rallies to fade.

Thursday, June 9, 2022

Morning Note: Those Starving Retailer Castaways...

That positive turnaround action threatened by yesterday's early session didn't play out, as, ultimately, stocks gave way to notable downward pressure. That ugly breadth reading I touched on in the video commentary turned out to be telling after all. 

Wednesday, June 8, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Underlying Forces

As mentioned in yesterday's note, and as I'll illustrate shortly in our mid-week market snapshot video, our base case remains that the ultimate bottom for the equity market's malaise has yet to be explored.

However, at the moment, our economic base case remains that the next US recession will likely not be a 2022 affair.

Of course our base cases are subject to change as this all plays out going forward.

Tuesday, June 7, 2022

Morning Note: Rate hikes, QT, no more QE, yada yada...

Events in Asia -- specifically, the Australian central bank surprising with twice the anticipate rate hike, and a pledge to maintain diametrically-opposed to that policy in Japan (seeing the yen to a 20-year low) -- the former in particular, was felt in the overnight trading action, inspiring a notable dip in global equity futures.

Monday, June 6, 2022

Morning Note: China, Equities and Oil

Here's yesterday's entry to our internal market log:
6-5-2022
Our expectations around the Chinese setup seem to be playing out. That being a relaxing of covid restrictions and the implementation of significant stimulus – leading to Chinese equity outperformance and a bid under industrial commodities into the second half of the year. Strong political incentive makes this a likely scenario.

Saturday, June 4, 2022

Quote of the Day: Dangerously lulled...

As clients know, our assessment of go-forward general conditions, alas, jibes -- in a it's-different-this-time sense -- with the following from one of today's most thoughtful macro commentators, Grant Williams (the featured guest in the latest global macro addition of the Top Traders Unplugged podcast):

"Now, it's going to be a terrible, terrible, time for retail investors who are used to passive and are buying the Cathie Wood stories and are buying all these wonderful stories about progress and technology and 50% returns."

"...you're going to see things happen I suspect in the next 5 to 10 years that most people who've come late to markets over this last couple of years of kind of frenzied speculation think are either impossible or when they happen completely unfair. And they'll want someone to step in and fix it for them..."

While, indeed, we firmly believe that the next several years (if not decades) will produce a vastly different set of challenges and opportunities than folks have grown accustomed to, we do believe that the opportunities will be profound, just different and unexpected -- and I suspect grossly unexploited by the retail investor who's been lulled by what they've come to believe (ultimately ill-conceived) about how markets, and economies, work...

Friday, June 3, 2022

Economic and Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Under the Surface

This morning's headline jobs number came in better than expected, while the "internals" (distribution across sectors, hourly wages, participation rate, unemployment rate, etc) were close enough to expectations to not budge the needle with regard to Fed policy the next few months.

Thursday, June 2, 2022

Morning Note: Recession Risk Remains Low, But Still Not a Good (Equity) Market Setup Right Here...

While we're not due to perform our deep weekly economic dive till tomorrow, I thought I'd go ahead, with the help of Bespoke Investment Group, and highlight 3 not-small releases from yesterday.

Wednesday, June 1, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Obsession

In yesterday's note I mentioned that this week is not-small in terms of data releases. Given that the market obsession is ultimately over the Fed, and that the Fed's obsession has to be ultimately with the overall state of the economy, well, data surprises (along with Fed-commentary) will indeed move markets -- more than "usual", I suspect, as things shake out...

Today, for example, we'll get the reads from the ISM US Manufacturing Survey, job openings, speeches from Fed-heads Williams and Bullard and the Fed's Beige Book (the local state of economic affairs as reported by each Fed branch). The Fed speeches in particular could inspire notable intraday moves, in either direction.

I pointed out in last week's economic update that part of the narrative among economists who remain sanguine about the present state of affairs is the massive amount of savings ($2+ trillion) that presently rests on consumer balance sheets. Per the following from BCA research, those savings are either very concentrated, or are being closely guarded for the time being. I'm guessing the former:

"Excess savings may help achieve the “soft landing.” However, there are early signs that either many lower-income Americans have spent the money, or their savings accounts are earmarked for a rainy day, and many people aim to spend only what they earn.

Higher-income Americans are still willing to spend, but this group is shifting spending away from goods and towards services, which is consistent with strong results from the US airline carriers, which report a significant gain in pricing power. A similar message came from both Nordstrom and Macy’s. Clearly, American consumers are highly heterogeneous, and there is a significant bifurcation between “haves” and “have nots.”

It is, however, concerning that many of the wealthier Americans have lost a significant percentage of their nest eggs in the stock market. The theory goes that the wealth effect is one of the main mechanisms through which monetary tightening affects consumer demand. It stands to reason that it is only a matter of time (unless the stock market rebounds) before even the wealthier cohorts start tightening their belts, dampening demand for consumer services."

While we sympathize with the above narrative, and while growth has clearly slowed, our present base case remains that the US sidesteps recession in 2022... Of course that is subject to change based on the facts, as they emerge, going forward.

Yesterday's equity market delivered a choppy session characterized by ugly breadth (even when the SP500 was green its losers notably outpaced its gainers). We'll see if this is just a pause in this snapback rally, or if that's all we get. The SP500 is in the green as I type, although, once again on some pretty stinky breadth (over half of the SP500 and 60% of the Nasdaq Comp members are presently in the red). Hmm...



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

Europe attempting to bounce off of yesterday's drubbing, with 12 of the 19 bourses we follow trading up as I type.

US stocks are mixed to start the session: Dow up 29 points (0.09%), SP500 up 0.30%, SP500 Equal Weight down 0.33%, Nasdaq 100 up 1.02%, Nasdaq Comp up 0.98%, Russell 2000 down 0.09%.

The VIX sits at 25.55, down 2.44%.

Oil futures are up 2.15%, gold's up 0.50%, silver's up 1.44%, copper futures are up 0.86% and the ag complex (DBA) is up 0.59%.

The 10-year treasury is down (yield up) and the dollar is up 0.50%.

Among our 38 core positions (excluding cash and short-term bond ETF), 22 -- led by energy stocks, silver, Disney, communications stocks and AMD -- are in the green so far this morning. The losers are being led lower by Albemarle, Dutch Bros, healthcare, consumer staples, materials and financial stocks.


"When the facts change I change my mind."  --JM Keynes

Have a great day!
Marty

Tuesday, May 31, 2022

Morning Note: Headwinds

The "counter-trend" rally in stocks is being put to the test to start the week. Per our latest video snapshots, there's a bit of upside room left between here and our target (before it gives up the ghost, as, in our view, probabilities suggest), however, that last mile or two could be a challenge.

Monday, May 30, 2022

Equity Market Conditions Less Bad -- And -- Thoughts on China

The latest two entries to our internal market log are worth sharing:

05/28/2022 PWA EQUITY MARKET CONDITIONS (EMCI) INDEX: -8.33
(from -58.33 on 4/29/2022)

SP500 fell markedly during the first 3 weeks of May. Bottoming on 5/20 (a number of our EMCI inputs were turning up roughly a week prior), then bounced hugely from there, catching back up to essentially the flatline thru 5/27 (the bulk of the move occurring 5/25-5/27).

Friday, May 27, 2022

Economic Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Stock Market Snapshot (video)

One thing I forgot to mention in this morning's update (as mentioned in Wednesday's morning note) is that there's likely a serious rotation occurring within funds whose mandates keep them at a targeted stock/bond mix. In that stocks over the past month have underperformed bonds notably, there's some month-end rebalancing (overweight bond selling, underweight stock buying) that is likely helping this rally along -- but only for the moment... 

Morning Note: Inflation's Cooling (ever so slightly), But It'll Remain a Thing...

So, personal income for April, released this morning, rose at a slower pace vs March, and slower than economists' expected. Personal spending's rate of change slowed month-on-month a bit as well, however, it came in .2% higher than expectations. But of course the price index is what everyone's keying on this morning!

Thursday, May 26, 2022

Morning Note: Fed Can't Have it Both Ways -- And -- So Far So Good (our 'short-term' assessment)

A smart, deep-thinking subscriber (and client) inspired some content for this morning's note.

Here's a snippet from my response to his thoughtful contribution to yesterday's comment section:

Wednesday, May 25, 2022

Morning Note: No Surprises Right Here

The equity market has been buffeted of late by headwinds that, given the present state of inflation and overall slowing general conditions, should come as no surprise to anybody. That is, companies are having to state it like it is, with regard to their go forward prospects.

Dick's Sporting Goods this morning being the latest.

Tuesday, May 24, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Consumers Plan to Spend Less, but Fly More -- And -- Weakening Housing Market

Well, judging by overnight and pre-market futures action, it's looking like the bounce off of technical support (green circle on the 60-minute chart below) that began last Friday may be short lived.

Monday, May 23, 2022

Morning Note: The Good News

As I've expressed in recent video commentaries, a stock market bounce right here makes some technical sense. However, as I've also pointed out, while we're open to all possibilities, the likelihood that we've seen the ultimately worst remains somewhat low. I.e., the conditions that often surround a durable bottom in stocks have yet to come together...

Saturday, May 21, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Friday, May 20, 2022

Morning Note and Weekly Economic Snapshot

China's central bank stepped in last night with a cut to its 5-year prime loan rate that was larger than the market expected -- that jibes with our view that all policy stops will be pulled out during the remainder of the year as authorities attempt to stimulate the economy out of what has become quite the mess. That would bode well for our foreign equity and commodity exposures going forward.

Thursday, May 19, 2022

Morning Note: History Rhymes

Yesterday's rout, one could say, reflected Walmart's and Target's reportedly ugly state of affairs; shrinking margins, bulging inventories, and so on. But, then again, per our assessment of present conditions, and our video snapshots, odds firmly favor more downside in equities before this year's price action plays itself out.

Wednesday, May 18, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: The Fed's Fine Fix

This from Bespoke Investment Group's note this morning says lots about the present setup:

Emphasis mine...

"Yesterday, WMT had its largest one-day decline since the 1987 crash and now TGT is on pace to do the same. The experiences of both companies further reinforce the point that we are operating in one of the most complicated macro environments that any company or investor has had to deal with. Few companies are so entwined into so many aspects of the US economy as WMT and TGT, and their logistics and supply chain operations rival or exceed those of most other companies. If they're having these types of issues keeping up with the rapidly changing environment, who isn't?"

Tuesday, May 17, 2022

Morning Note: Just Assessing Probabilities

This morning's rally in stocks should come as no surprise if you've been with me on the recent videos. Short-term technical patterns have been pointing to the potential for a strong oversold rally.

Here's yesterday's entry to our internal market log:

Monday, May 16, 2022

Morning Note: "A Key Risk?"

"The bottom line? Supply chains and inflation remain in flux, but there are signs that these issues could start to work themselves out in the second half. If they do, a less hawkish FOMC could be the market surprise for the second half. A key risk, though? Economic activity remains strong, but there are legitimate signals that demand has peaked."

Let that -- from Bespoke Investment Group's weekend note -- sink in "A key risk, though? Economic activity remains strong"... 

Friday, May 13, 2022

Our Fear/Greed Indicator Is Reading Green...

In Monday's morning note I made the case for a potential "oversold bounce" in the stock market this week. I mentioned the possibility again in last evening's video commentary. 

Morning Note -- And -- Economic Update (video)

Per last evening's look at the short-term S&P 500 setup (video featured below), a relief rally is certainly in the cards right here. As I type, equity market futures are confirming that notion. Whether or not it sticks, well... of course that remains to be seen.

Thursday, May 12, 2022

Market Snapshot/Reality Check (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: Be Patient, But Only When.........

So, while yesterday's release of the May CPI number came in hotter than the equity market (actors in the aggregate) had hoped, and than economists had forecast, this morning's PPI (Producer Price Index), came in on the nose of consensus expectations (up 0.5% month-over-month versus 1.4% the previous month). In terms of market reaction, zilch! S&P 500 futures were down 0.85% coming into the number, they're down 0.76% as I type (2 minutes ahead of the open).

Wednesday, May 11, 2022

Morning Note: Timidity...

While listening to Bloomberg live this morning to catch the March CPI number, and the market's response, an interview with former Federal Reserve Board member Bill Dudley captured my attention.

Tuesday, May 10, 2022

Morning Note: "Ironically"

Yesterday's (and overnight in the futures market) rally in treasuries (yields lower) comports with the notion we explored yesterday; that softer than expected inflation data (CPI due tomorrow) could inspire an oversold bounce this week (but don't hold your breath).

Premarket action (a rally) in equities suggests traders may be sniffing that potential out. 

Monday, May 9, 2022

Market Snapshot/Reality Check (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: Maybe An Oversold Bounce in the Offing, But Still An Otherwise Messy Setup...

An oversold bounce makes some sense this week, but nothing here looks like a bottom's forming...

Here's from Saturday's entry to our internal market log:

Saturday, May 7, 2022

Quote of the Day -- And -- Asleep at the Wheel?

Way back in 1984, on the day after my 21st birthday, I had what it took to get hired at the firm now known as The Principal Financial Group. That is, I had a pulse...

Friday, May 6, 2022

Economic Update and Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: No Bad News on Jobs, So No Good News for Stocks

US stock futures popped a tad higher at 5:30am pt when the jobs number was released. While the number -- the establishment survey number -- came in at 428k, which was 58k higher than expected, the month-on-month hourly earnings miss (.3% vs .5% expected), the household survey number showing a loss of 353k jobs and revisions (establishment survey) totaling -39k for the prior 2 months, had, I suspect, the market thinking maybe there's less inflationary pressure percolating in the jobs setup.

Thursday, May 5, 2022

Pondering...

Just kinda sitting back this morning and pondering the market mood...

Thinking about clients; thinking about what they're thinking about the market...

Morning Note: Not A Good Look....

Suffice to say that while yesterday's rally was very impressive, the underlying picture -- technically speaking -- remains concerning. 

Wednesday, May 4, 2022

Charts of the Day: Commodities Traders Need Far More Convincing...

Just a quick note on today's J. Powell press conference.

While stocks rallied on Powell poopooing a .75% hike at a future meeting and on the Fed delivering half the expected monthly balance sheet reduction (for the moment), as for the goal of taming the hottest inflation in 4 decades... umm, well, have a look at today's moves in:

Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: A Dose of Reality -- And -- Zero Wiggle Room

So, you bet, a 12.4% year-to-date decline in the S&P 500 and a 19.5% year-to-date hit to the Nasdaq is nothing so sneeze at. I mean, I'm sure folks are feeling it, particularly those who thought they were playing it "safe" with the old tried and true 60 (stocks)/40 (bonds) mix. That last one (using Blackrock's 60/40 ETF as our proxy) is down 10.5% on the year so far.

Tuesday, May 3, 2022

Morning Note: So Now You Know

So, when you think about the big event of the week -- the Federal Reserve May Policy Meeting -- going on today and tomorrow, what you're thinking about is the institution's impact on financial conditions. Are their policies fostering loose and easy conditions (plenty of liquidity and low interest rates), or tight conditions (low, or less, liquidity and rising interest rates)?

Monday, May 2, 2022

Quote of the Day: Growth Down, Inflation Up

The fiscal response to Covid shattered all historic norms and established precedent, and, therefore, foments expectations of reactive relief measures (read support checks, etc.) whenever the populace experiences heightened pain.

Morning Note: Commodities Continue to Correct, But the Long-Term Setup Remains Extremely Bullish!

Global equity and commodity markets are starting off what will be a tense week (at least until Wednesday when the Fed wraps up its May policy meeting) on the back foot. China's PMI's (Purchasing Managers Indices) weak readings are exacerbating global demand fears.

Coincidentally, I, among other things, once again touched on China in our internal market log over the weekend. 

Here are a couple snippets:

Friday, April 29, 2022

Morning Note and Economic Update

In this morning's note we'll take a look at today's early numbers then jump to our weekly video economic update wherein I also feature a snapshot of the latest action in the S&P 500 Index.

Thursday, April 28, 2022

Morning Note: Mind the Gap

In yesterday's video commentary I, alluding to the intraday rally the market was experiencing at that moment, said "don't hold your breath here folks, this is not the kind of action you see during bull markets."

Well, judging by what is going to be a very impressive start to today's session (the bell rings in 4 minutes, and Nasdaq 100 futures are up big), perhaps that wasn't such a smart thing to say.

Wednesday, April 27, 2022

Market Snapshot (video)

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:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


Morning Note: When "big price changes occur"

Just going to muse a minute on US stocks for this morning's note.

We've been maintaining for months now that the equity market (all participants in the aggregate) simply hasn't taken the Fed at its word... Considering valuations, how instrumental the Fed was in getting us here, yada yada, the notion that central bankers are in the mood to take actions that would seriously tighten financial conditions, and crack the stock market in the process, seems virtually implausible -- as it is such a departure from what we've come to know about this Fed these past many years.

Tuesday, April 26, 2022

Morning Note: Gotta Understand Incentives and Constraints

From last Thursday's note:
"I should add that China has backed itself into the proverbial corner, and is notorious for ramping up the infrastructure spending (whether it needs it or not) to fight its way out. Particularly when its autocratic leadership is looking for reappointment to another term come the second half of this year. That's ultimately a bullish setup for commodities... and, not to mention, Chinese equities (down 36% over the past 12 months) heading into the second half of the year..."

Monday, April 25, 2022

Morning Note: Xi's Calculation

Global asset markets suffered notably overnight as emerging concerns over the state of the world economy met up with China's unbending zero-Covid policy. Reports have it that Beijing is on the verge of following Shanghai into total lockdown.

Friday, April 22, 2022

Economic and Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Hedge Your Bets Right Here -- And -- "Let's Understand What Is"

In last Thursday's note I stated:

"Clearly, the equity market (players in the aggregate) still doubts the Fed’s stated resolve. I.e. The extent of the tightening they’re threatening is simply not fully discounted in stock prices."

Thursday, April 21, 2022

Quote of the Day

This, from a piece published today by research provider Variant Perception, should sound familiar to regular readers/video watchers:

"...we still expect Brazil CPI to peak imminently and trend down, allowing the BCB to end its hiking cycle in 2Q22. The current Selic rate is at 11.75%, with money markets pricing rates to peak at 13% by Dec 22. A combination of slowing inflation and poor growth LEIs should encourage an easing cycle, which is bullish for Brazilian bonds."

Morning Note: Don't Get Cute Right Here...

Looking across our sector, regional and asset class tracking, this week is seeing quite the reversal in terms of asset class (stocks and commodities in particular) performance.

Wednesday, April 20, 2022

Market Snapshot and a Look at Two New Positions (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Eyeballing Bonds Right Here

Here's yesterday's entry to our internal market log:
4/19/2022

Strong equity rally today, despite notably growing bearishness among the “smart money.” Breadth is outstanding, although volume is notably weak.

Tuesday, April 19, 2022

Morning Note: It's Always About Underlying Conditions!

Just a little thinking on my keyboard this morning...

Listening to the US equity strategist for one of our research resources yesterday, I found myself amazed at his unabashed bullishness over the stock market for the next 12 to 18 months. He cited the "2.3 trillion dollars" that currently rests in US consumers' savings accounts, the still-historically (although higher than recent) low home mortgage rates, his expectations that the Fed will take its time at getting rates to what he believes is "neutral", and will, therefore, not spark a recession within the next 12 to 18 months and, therefore, stocks will likely trend higher over that timeframe. 

Also took in a podcast yesterday featuring a highly-respected global macro analysts. His near-term market take on equities was one of notable caution. In a nutshell, he characterized current conditions as demanding a cautious approach to asset allocation. He cited the Fed's quest to tighten financial conditions and essentially made the case that the punchbowl that the market's been gulping from these past many years is about to be pulled (my words, not his).

Monday, April 18, 2022

Morning Note: Some Central Bank Divergence

Each week we study exchange traded fund (ETF) flows among the countries, the asset classes and the sectors they track to help us get a sense of global investor sentiment.

At first blush, the country flow the past couple of weeks is perhaps counterintuitive.

Friday, April 15, 2022

Economic Snapshot: Flat Screens or Flattened Noses (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Thursday, April 14, 2022

Morning Note: Inflation May (or may not) Be Peaking, But the Fed's Just Getting Started

Here's a snippet from last night's entry to our internal market log:

"The general narrative is that inflation has peaked… Fed governor Waller stated today that while a 50 bp Fed funds hike is his preference for the May meeting, he is “forecasting that this is pretty much the peak (for inflation) and it’s going to start coming down.” Although he added “but it doesn’t relieve us of our job to remove accommodation -- to get inflation down.”

Wednesday, April 13, 2022

Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: One Wonders...

Per yesterday's note, considering some evidence of supply chains easing, rising inventories, base effects and so on, inflation, on a rate of change basis, should slow a bit over the coming months. 

That said -- and it'll happen on the producer end as well -- this morning's PPI (Producer Price Index) release... well, we'll let the graph speak for itself:

Tuesday, April 12, 2022

Morning Note: Traders Buying the News...

The highly anticipated March CPI report delivered a slightly higher than anticipated headline number (8.5% year-on-year), however the core reading came in below expectations, flashing a .3% month-on-month reading, versus the .5% economists expected.

The latter has equity traders feeling it this morning. I.e., placing bets that inflation looks to be peaking.

Monday, April 11, 2022

Morning Note: Global Winds Blowing...

Amid an otherwise sour start to the week, a handful of European markets are catching a bid this morning on market-friendly first-round French presidential election results (read Macron over Le Pen), while Asian equity futures are following through on a rough overnight cash session, apparently in response to the utterly draconian Covid lockdown measures China is enforcing on millions of its people. 

Friday, April 8, 2022

Economic Update: General Slowing, Transportation Warns -- And -- "Not Pretty" Setup for Equities (video)

Note: Near the end where I say "we did get a low single-digit decline from the peak", meant to say "low double-digit."

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Service Sector Inflation Angst

Despite growing evidence that certain bottlenecks may have eased of late --

Thursday, April 7, 2022

Morning Note: Sectors Flash a Warning...

While our overall economic assessment continues to not signal looming recession -- this morning's jobless claims number (lowest since 1968) supports that notion -- the action among equity sectors is nevertheless raising a bit of a red flag.

Wednesday, April 6, 2022

Morning Note: Messing with the Market's Belief System

As I keep stating, in our view, the amazing stock market resilience in the face of some serious, call em Fed headwinds, reflects, among another myopic view or two, what amounts to general disbelief that Fed heads truly mean it -- or have the will to follow through amid a market meltdown -- when they say they're serious about tackling inflation.

Tuesday, April 5, 2022

Chart of the Day: Oof!

Economist Jens Nordvig points out this morning that while the Fed is clearly posturing to remove the punchbowl that's kept the equity market anesthetized (or inebriated, if you will) against, at times, let's say fundamental headwinds these past many years, the 10-year treasury yield remains notably lower than it was the last time the Fed threatened to kill the party (resulting in a swift 20% correction) -- when, as he points out, inflation really wasn't a thing...

Oof!

"US 10-year yields are breaking to a new high for the post-COVID cycle (following Quantitative Tightening comments from Brainard). But they are still 70bp below the 2018 cycle high (when inflation was much lower)."


Yeah, no wonder, per our morning note, the growing skepticism among "smart money" players...

Morning Note: "Smart Money" Skeptical

In yesterday's morning note (and last Thursday's video) I mentioned that our own sentiment indicator recently turned positive, meaning, on net, fear presently reigns over greed among market players in the aggregate. Yes, that's contrarianly positive... 

Monday, April 4, 2022

Morning Note: "Out of Step"

Looking at present trends/setups, and what they portend with regard to US equities, for --

Friday, April 1, 2022

Economic and Brief Stock Market Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Thursday, March 31, 2022

Morning Note: Politics and Markets -- And -- A Most Instructive Quote

Once again sharing from our internal market log:

3/30/2022
Thinking about political constraints and incentives this evening:

Headline: “Biden Team Weighs a Massive Release of Oil to Combat Inflation.”

I.e., hit the SPR, which was originally intended to tap only in the event of national (security) emergency. Not, that is, to manipulate the price when market forces dictate one higher than is politically expedient.
There’s so much wrong with the above I’m not even sure where to begin. But, suffice to say, the absolute most that can be hoped for is a temporary reprieve.

Wednesday, March 30, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Not 'Ultimately' a Bullish Setup Right Here

Last evening's entry to our internal market log:
3/29/2022

Interesting action today. Commodities continued their notable slide at the open, while stocks (non-US especially) rallied hard. This was clearly in anticipation of constructive peace talks.

While the talks did not result in a ceasefire, some level of de-escalation was assured; although that’s already been occurring in specific areas of late, and skepticism is warranted with regard to the motivation.

Commodities crept back up during the session: Among our core positions, gold finished 4 bps in the green, silver lost only 9 bps, energy stocks clawed back all but 26 bps of their earlier losses. Metals miners and base metals futures however still closed down 1.42% and 1.80% respectively.

Bonds rallied.

So, were it not for the continued malaise in base metals, I’d say the action in commodities reflects anticipation of no end in near-term sight for Russia/Ukraine. The rebound in gold, and the bullish action in bonds seem to support that notion. Stocks, however, while (US) still not positive on the year, rallied as if odds favor a near-term end to the war.

Speaking of stocks, the action entirely comports with my view that myopia is acute right here, and, therefore, given the possibility of looming 
peace , no one wants to miss out on what they expect to be a sharp rally on the news. That said, the more the market continues to move higher on the prospects for peace, the more likely peace ultimately becomes a sell the news event. As, in the immediate aftermath, the market will have to deal with major headwinds emanating from a Fed that appears hellbent on reining in inflation.

Not, ultimately, a bullish setup right here…

Asian equities were positive overnight, with all but 3 of the markets we track closing higher.

Europe's struggling this morning, with 13 of the 19 bourses we follow in the red as I type.

US stocks are mixed (mostly lower) to start the session: Dow up 29 points (0.08%), SP500 down 0.24%, SP500 Equal Weight down 0.18%, Nasdaq 100 down 0.49%%, Nasdaq Comp down 0.52%, Russell 2000 down 0.38%.

The VIX sits at 18.93, up 0.16%.

Oil futures are up 3.58%, gold's up 0.71%, silver's up 0.46%, copper futures are up 0.22% and the ag complex (DBA) is up 1.11%.

The 10-year treasury is up (yield down) and the dollar is down 0.59%.

Among our 37 core positions (excluding cash and short-term bond ETF), 22 -- led by MP (rare earth miner), base metals miners, uranium miners, wind stocks and base metals futures -- are in the green so far this morning. The losers are being led lower by carbon credits, Eurozone equities, semiconductor stocks, banks and tech stocks.


From William Struss's and Neil Howe's enlightening and provocative 1997 book The Fourth Turning (I highly recommend):
“There is a mysterious cycle in human events,” President Franklin Roosevelt observed in the depths of the Great Depression. “To some generations much is given. Of other generations much is expected. This generation has a rendezvous with destiny.”
The cycle remains mysterious, but need not come as a total surprise. Though the scenario and outcome are uncertain, the schedule is set: The next Fourth Turning—America's next rendezvous with destiny—will begin in roughly ten years and end in roughly thirty. How can we offer this prophecy with such confidence? Because it's all happened before. Many times."

Hmm.... 


Have a great day!
Marty

Tuesday, March 29, 2022

Morning Note: Musing on the Current Commodity Setup -- And -- The Ultimate Investment Question

Yesterday evening, after skimming through the latest from a few commodity bulls generous enough to post their thoughts on Twitter, I found myself contemplating the short-term setup on my keyboard. 

Here you go:

Monday, March 28, 2022

Morning Note: Much to Watch!

Like I said in the weekend economic update, we hold no delusions with regard to commodities right here. Meaning, while we remain notably bullish on their go-forward prospects, they've run up a lot over a short period of time and, among other potential catalysts, any hint at peace in Europe would have them indeed pairing a chunk of those gains. Note that we turned bullish commodities well before the invasion.

Sunday, March 27, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Friday, March 25, 2022

Economic Update: No Delusions Regarding Commodities -- And -- OK Global Sentiment (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: No More Waiting on the World to Change (and a little music )

Super quick note this morning (economic update up next).

So, I've dared herein of late utter those famously-considered-ill-conceived four words when it comes to investing "it's different this time." But, you know, while, sure, human nature seems to never change, over many decades it evolves (or perhaps [in a very protracted manner] cycles) through patterns that ultimately inflect into societal sea changes that indeed alter the structural investment landscape and, therefore, virtually demand a re-thinking of what we think we know about asset class relationships, correlations and so on.  

Thursday, March 24, 2022

Morning Note: Minds Wide Open...

So, I keep saying that the US equity market has major headwinds in its face, despite that (via the SP500) it's only off 6.5% year-to-date. Yes, "only!"

Staying with this week's theme, we'll touch once again on the mystery that is a stock market that, for the moment, holds up against the Fed's explicit promise to remove its punchbowl.

Wednesday, March 23, 2022

Stock Market Snapshot (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Maybe It's ....................

In yesterday's note I suggested that it was no mystery to us why stocks (via the SP500) have only suffered mid-single digit declines year-to-date (although they were low-double digit at one point). I referenced the "wall of worry" adage to suggest that there's sufficient potential buying pressure that traders en masse are all too aware of should global angst suddenly abate a bit. The fear of missing out, if you will, keeps them engaged...

Tuesday, March 22, 2022

Morning Note: No Big Mystery

The action in equities of late has been nothing short of fascinating, not mysterious mind you, but fascinating.

Monday, March 21, 2022

Morning Note: "Pixie Dust"

A most common refrain on Wall Street is "don't fight the Fed." And history does indeed lend credibility to that advice. I.e., certainly, when the Fed is playing monetary policy loose and easy, asset prices do tend to rise. And the opposite generally holds true; markets tend to ultimately struggle when the Fed attempts to quash the ill effects of what forever amounts to a party that got sloppy and stayed open way past closing time.

Sunday, March 20, 2022

Market's Distracted (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Friday, March 18, 2022

Economic Update: Housing Okay, Although Homebuilders See Headwinds (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Quote of the Day: Again, Status Quo Bias won't have it going forward....

Macro thinker Lynn Alden nails it in this month's newsletter:
"In recent years, many people spoke about how inflation was dead, and how commodity scarcity was a thing of the past.

The problem with an efficient-but-not-resilient global supply chain, is that it stops working once the smallest of exceptions occur. It could be a natural disaster of some sort, such as a virus. It could be a human disaster of some sort, such as a war. Or both, in the case of the 2020s decade thus far. A highly-levered and fragile system is not designed for such shocks.

And the problem with calling commodity scarcity a thing of the past, is that cheap commodity prices deter new investment in new commodity projects, resulting in stagnant supply, and eventually scarcity and higher prices. The commodity industry is notoriously boom-and-bust in nature every couple of decades due to this dynamic."

And to truly punctuate our status quo bias point:

"The structure global monetary system tends to change every several decades either due to new technology or sovereign defaults (often both), and yet participants tend to assume it will be permanent this time, which is a classic “end of history” perspective."

 

Morning Note: Bottlenecks Do Inspire Investment -- And -- Are We Paying Attention?

Keeping this morning's note brief, as Friday's are when we dig into the latest economic data (weekly update to follow), I wanted to just touch on the ongoing challenges around production bottlenecks -- as they're a real issue with regard to the near-term inflation trend.

Thursday, March 17, 2022

Quick Technical Stock Market Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: The Most Dangerous 3 Words In Investing

Suffice to say that yesterday's rally -- considering the distribution of the gains and the extent of the moves across regions -- was more about international developments (glimmers of hope around Russia/Ukraine and very market-friendly comments out of China) than it was about J. Powell once again coming to the rescue.

Wednesday, March 16, 2022

Morning Note: Which Powell's Gonna Show?

So, it's Fed day, and, as I mentioned in our latest video update, Chairman Powell seems to have a knack for pleasing the equity market in his post-announcement pressers. That said, I should clarify, that's been the case pretty much from early 2019 on. Up to that point, his market-friendliness notably paled in comparison to, say, the likes of Ben Bernanke.

Tuesday, March 15, 2022

Morning Note: Latest Log Entry

This morning's open looks like a virtual replay of yesterday's; US equities (save for commodity-related) up, commodities down. Which (commodities down) is/was, in our view, a high probability occurrence, per the messaging in recent videos. The question of course would be, are we talking trend going forward?

Monday, March 14, 2022

Morning Note: Fed's Meeting, Commodities Retreating

Well, the Fed holds its much-anticipated March meeting this week, and they've virtually assured that a formal tightening cycle is about to begin.  All indications suggest that a .25% bump in the Fed funds rate will be announced; we'll see what they have to say about the future of their enormously bloated balance sheet. Make no mistake, the financial markets will be hanging on every word, particularly those of Chairman Powell during the presser.

Sunday, March 13, 2022

Brief Stock Market Update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Friday, March 11, 2022

Weekly Macro Update

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Consumers Are Feeling It (inflation)

Equities, in the wee hours, were looking to end the week on a positive note, inspired by a V. Putin comment that ceasefire talks have taken "positive shifts." However, as I type, the Dow has given back the lion's share of those gains, the S&P 500 is flat and the Nasdaq is now in the red. While we'll pray that indeed there's light (very soon) at the end of this tragic tunnel, keep in mind, this is the same V. Putin who said there'd be no invasion right up to the day it began. 

Thursday, March 10, 2022

Morning Note: CPI and Central Bankers' Concerns

As I suggested in last week's macro update, given the recent extreme ramp up in commodities prices, we should expect to see some choppiness there, if not real downside volatility, in the near-term as "things" move forward. 

Friday, March 4, 2022

Macro Update: Clear as Mud (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Commodities on a Tear

This will be a short note, followed a little later today by our weekly macro video.

Globally, stocks are continuing their descent on the back of the Russia/Ukraine war and its implications across markets and economies.

Thursday, March 3, 2022

Wednesday, March 2, 2022

Stocks, ag, metals, gold and silver technical update (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Question now is .25 or .50%?

In Monday's morning note we featured data showing that fed funds futures were, in the face of intense global angst, still pricing in a zero chance that the Fed will not raise its benchmark rate at its upcoming meeting.

Tuesday, March 1, 2022

Morning Note: The "S" Word

Our messaging herein, with regard to the immediate general setup, is getting redundant. I.e., the Fed doesn't seem to be backing down from its signaling that a rate hike, that a halting of QE, and that QT (quantitative tightening [balance sheet "shrinking"]) is on the near-term horizon. Other central banks, however, the EU's and Australia's come to mind, are sounding a bit of a (relatively) dovish tune due to the dynamics around Russia/Ukraine.