Tuesday, October 4, 2022

Morning Note: China Oomph -- And -- Meh Manufacturing

In Saturday's video I made mention of "mum" being the word of late around China's economy-crippling zero-Covid policy.

Well, if we're looking for a visual that suggests maybe the policy is about to be abandoned, here it is:

Monday, October 3, 2022

Morning Note: Equity Market Conditions a Little Less Bad

In recent posts we've presented a case for a bear market rally, and even dared to hint at the notion (as opposed to the conviction) that a bottom may not be in the too distant (whether in terms of price or timing) offing. 

Now, I need to be clear, market skies are anything but, well, clear, right here... However, and make no mistake, they indeed won't be as stocks begin to form their ultimate bottom this go round. On the contrary, they'll likely be exceedingly dark, precisely then.

Saturday, October 1, 2022

Economic Update and an Important Look Below the Stock Market's Surface (video)

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*Note, at 12:20, meant to say "best day in 2 years" not "20"


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, September 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: Where's Waldo?

Yesterday's final look at Q2 GDP came in unchanged at -0.6%, with personal consumption besting consensus expectations with a 2.0% annual increase. Initial jobless claims continue to defy the recession narrative, with a sub-200k print for last week. 

Thursday, September 29, 2022

Morning Note: Train Wrecks

This from Bloomberg's David Finnerty last evening pretty well sums up the consensus among macro gurus with regard to yesterday's action in the pound:

Wednesday, September 28, 2022

Stock Market Snapshot: Getting Crowded on the Bear Side of the Boat (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: Analysts Getting the Message

Equity futures were nicely green last evening, that is until word hit the wire that Apple instructed its suppliers to pull back on iPhone 14 production, citing reduced demand... On that, futures promptly rolled over.

Recall from our September 20 morning note:

Tuesday, September 27, 2022

Morning Note: Another Bull Bites the Dust

Okay, so, the June low in stocks wasn't, on a closing basis, the ultimate low after all -- not after yesterday. Yesterday's session confirms the present bear market is still alive and well, making it the 12th longest in history, although the 24% decline (SP500) makes it, frankly, benign, thus far, in the grand historical scheme of things. Even our own (subject to change) downside target doesn't get us to -30%... 

Just throwing that out there...

Monday, September 26, 2022

Morning Note: Taking the Fed at Their Word

No fewer than a dozen (voting and non-voting) Fed board members will be speaking this week... It'll be interesting to see which, if any, of them will waiver from their hawkishness -- as, indeed, they continue to tighten the monetary screws on an already weakening economy.

Sunday, September 25, 2022

Quote for the Next Bull Market -- OR -- As (If) You Worry Your Way Through What's to Come

Clients, you've all heard me say during our review meetings that -- while we remain humble, open minded and offer no guarantees -- I probably have more conviction with regard to how we are/will be allocating assets with a 5+ year time horizon than I believe I have at any time during my 38-year career. Followed by "the next 5+ (or 15+) weeks or months are anybody's guess (uncertain, to put it mildly)."

Saturday, September 24, 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.

Friday, September 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: Equal Odds (technically-speaking), Short-Term...

Check this out...

The circled area in the graph below captures a notable move in the futures market night before last:


The white line represents the SP500 E-mini future contract, the blue is the US dollar index... Yeah, stocks were still reeling in the after hours session following the US Fed decision day. Until, that is, the Bank of Japan stepped into the currency market and sold dollars/bought yen -- sparking an impressive, although unsustainable, rally in equities. 

Thursday, September 22, 2022

Morning Note and a Fed Day Analysis (video)

Yesterday's market action was something to behold! As for equities, they were down notably on the Fed's interest rate announcement and statement, then an impressive (although with volatile swings) rally during Powell's press conference, then smashing lower into the close.

Wednesday, September 21, 2022

Morning Note: Key Highlights

Yeah, it's Fed decision day, and let's just say we've beaten that horse aplenty herein of late... We'll tackle the outcome, and the market reaction, in tomorrow's note.

For today, let's revisit some key highlights from our latest messaging:

Tuesday, September 20, 2022

Market Snapshot, and What the Fed's Up Against (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: "Fanciful"

Yes, tomorrow's Fed decision is a biggy for near-term market direction. But of course it's beyond the near-term that we're ultimately concerned with... As I hear myself repeating during virtually every client review meeting these days, we -- as we see the world at this juncture -- have high conviction with regard to our present strategy on a 5-year time horizon. It's the next 5 (or 15) weeks or months that remain notably precarious in our view.

Monday, September 19, 2022

Morning Note: Experiences vs Exercise Equipment

Last Tuesday's CPI number sent a jolt through the markets and had pundits talking up a 1% rate hike come this Wednesday. While such odds immediately popped higher (pricing in a 34% chance) in Fed funds futures, they've calmed back down since to a roughly 21% chance as I type.

Friday, September 16, 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: No Tailwind From Good News....

From yesterday's note:

"As for this morning's data releases, three things of note: "Headline" retail sales for August came in above expectations (although, "core", not so much), which supports our mild-recession thesis, but of course doesn't quell concerns over inflation... Same can be said about a weekly jobless claims number that came in lower for the 5th straight week..."

Thursday, September 15, 2022

Morning Note: The Retail Investor Force

 I expressed the following in yesterday's morning note:

"...we've come full circle. Globalization has, at least politically-speaking, run its course -- while wealth and income inequality have reached historic proportions. Therefore, the kinds of labor/consumer-friendly, protectionist, inflation-stoking policies that predated Volker, Regan and Thatcher are resoundingly back in vogue."

Wednesday, September 14, 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: Icing on the Cake

So, yesterday delivered the worst day for the S&P 500 since June 2020... That has to be a monster setback, right? 

Well, not to downplay the pain, but that -4.32% move took us merely back to last Tuesday...

Tuesday, September 13, 2022

Morning Note: Interesting Action

Yesterday's action was interesting from the get go... Not so much the follow-through from Friday's rally, but the fact that the VIX (tracks the implied volatility price in SP500 options) stayed notably bid start to finish.

Let's compare yesterday's action in the VIX (bottom panel, SP500 on top) to Friday's...

Monday, September 12, 2022

Morning Note: Beyond CPI

Markets will be intently focused on tomorrow's CPI report... Anticipation of a softer-than-forecast reading coming off of uber-bearish investor sentiment (along with a large net short position among SP500 futures speculators, and options dealers positioned to provide some oomph should the index push above 4,000) combined last Friday to offer up a preview of what to expect should, indeed, August's inflation come in the least bit cool. Of course a hot reading would likely inspire the opposite.

Friday, September 9, 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: Consumers' Hanging In...

As we've stated numerous times herein, and in our video updates, of late, our general conditions assessment has it that odds presently favor recession over continued expansion in the coming months. However, we -- at this juncture -- anticipate that it will be what we'll call your garden variety (if not historically mild) contraction.

Thursday, September 8, 2022

Morning Note: Obsessively Openminded!

Yesterday's rally was certainly impressive, and broad based (only 26 of the SP500 constituents closed down on the day), amid decent volume (9% above 20-day average).

So what gives?

Wednesday, September 7, 2022

Morning Note: Service Sector Holding Up, Per ISM Anyway

The closely watched ISM (Institute for Supply Management) Services Survey (a component of our PWA Index) results for August were released yesterday; the following, taken from the report, sums it up nicely:

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.

Tuesday, September 6, 2022

Morning Note: Latest Key Insights

We'll begin our commentary during this holiday-shortened week with some key insights from our latest messaging:

Friday, September 2, 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: Market-Friendly Jobs Report, Oof!! -- And -- Copper!!!

This morning's August jobs report came in close enough to expectations (which, btw, is consistent with our ultimately mild recession narrative) to not roil markets -- at least, given the pre-market reaction, initially. In fact, equity futures actually rallied as the details came through. My guess would be that the drop in hourly earnings, the .2% rise in the unemployment rate, and the rise in the labor force participation rate -- all being potentially disinflationary -- are the factors that have the market celebrating, at least on the announcement...

Thursday, September 1, 2022

Chart of the Day

Wow! What an intraday turnaround (although there's still 40 minutes left in the session).

Morning Note: All the Fed's Fingers and Toes

During our daily portfolio and macro session yesterday morning, Nick and I discussed the dynamics around the 2008 "Great Financial Crisis" and the milder early-00s (tech bubble) recession, and acknowledged the adage "generals are always fighting the last battle." 

I.e., the powers-that-be are forever reacting to and regulating conditions past in their efforts to influence conditions present and future. Inevitably engendering what becomes your proverbial finger in the dike metaphor:

Wednesday, August 31, 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 Disconnect

Sticking with our recent rock-and-a-hard-place theme, here's Bloomberg macro analyst Cameron Crise yesterday on the earnings risk stocks presently face:

Tuesday, August 30, 2022

Morning Note: One Way or Another, Odds Favor Further Pain for Stocks

 From our August 9th morning note:

"...given that present Fed policy, amid a generally weakening macro backdrop, remains in tightening mode (with QT set to double next month) — odds that the latest (short-covering and gamma-hedging) rally will fail and give way to, at a minimum, a test of the bear market lows remain elevated.

But what if we don’t actually enter recession? Won’t corporate earnings indeed hold up, supporting a new bull market trend going forward?

Monday, August 29, 2022

Morning Note: Shorts Finally (maybe) Getting it Right

We've spent a lot of time herein over recent weeks on positioning dynamics under the market's surface that help explain how a rally in stocks can gain some serious steam directly in the face of some serious fundamental headwinds.

Friday, August 26, 2022

Economic 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.

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: Goldilocks is Alive and Well

Below are snips from yesterday interviews with two Fed governors whose comments simply don't jibe with what the equity market appears to be pricing in of late. Suggesting perhaps that "the market" (traders in the aggregate) believes that the economy will contract to the point that it'll stay the Fed's hand before they break something, that inflation, in a weakening environment, will careen back to their 2% target, and that corporate profits will not decline as they typically do during economic contractions. 

Thursday, August 25, 2022

Morning Note: Brains to Burn

For whatever reason(s), perhaps something about the present political/geopolitical environment, or that of the past several years, or of the past several decades for that matter -- or, more likely, my still feeling a bit foggy as my covid symptoms fade (i.e., going easy on myself this morning) -- today's note will feature an essay I penned several years ago and feel compelled to share again this morning  

Enjoy (and please pardon my cynicism):

Wednesday, August 24, 2022

Morning Note: A Tough Go for the Savviest of Traders

In yesterday's note I featured the previous evening's entry to our internal market log. In it I made the following assertions:

Tuesday, August 23, 2022

Morning Note: Good News Not Welcome

Here's last night's entry to our internal market log:
8/22/2022

The Chicago Fed Nat’l Activity Index (an input to our PWA Index) for July was released today, and it surprised to the upside – scoring a +.27 vs a -.25 for June. A further contraction was expected…

Monday, August 22, 2022

Morning Note: Fed target not in reach...

While there'll be lots of data to parse this week, the ultimate market mover -- one might surmise -- will be J. Powell's speech in Jackson Hole on Friday.

Sunday, August 21, 2022

Economic Update and Stock Market Snapshot

Well, alas, the big catch from my Montana fishing expedition turned out to be covid. Unfortunately, unlike Madison River rainbows, there's no catch and release with this one.

Thus, my voice simply won't have it when it comes to recording this week's economic and stock market snapshot video. I was, however, able to score our index and update our charts enough to develop some share-worthy assumptions.

Saturday, August 13, 2022

Quote of the Day: Not yet ready to get "all in constructive."

As you've no doubt gathered from the recent messaging herein and, especially, on the videos, we see odds favoring (but never guaranteeing, mind you) yet another leg lower for the current bear market.

Friday, August 12, 2022

Economic and Stock Market Snapshot (video)

Correction, at the 7:54 mark I said "oversold", meant "overbought."

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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: How to View Inflation Right Here

Dear Reader,

Your inbox is about to get a reprieve, as I'll be on vacation next week. Now, while much of my time will be spent floating down Montana's Madison River with two close friends (one I've introduced to subscribers via my most-popular ever blog post, which, ironically, is not about markets), I can't guarantee, should the spirit, and the markets, move me, that I won't pop in a time or two (I'll effort not to) with something I feel compelled to express.

And here's this morning's note:

This week has been virtually all about inflation. As we suggested (i.e., the obvious), inflation was clearly peaking, leaving only the question of speed and magnitude of the coming deceleration. Keep in mind PWA is firmly in the structurally-higher inflation camp going forward. 

Thursday, August 11, 2022

Charts of the Day: Again, Hmm....

Here's yesterday's "Charts of the Day:"

Interesting, while equities are partying this morning (as we expected, at least initially, if inflation came in under expectations), long-term treasury prices (first chart), after an initial surge, seem to have a different take (they will drop when long-term inflation expectations increase), as do inflation swap spreads (they will rise when inflation expectations increase [2, 5 and 10-yr featured])... Hmm....

Morning Note: Doesn't Pass the Smell Test

Last night's internal market log entry: 
8/10/2022

The SP500 has seen an impressive ramp back to 4,200, on really strong breadth, no less. One might conclude that this is the makings of a new bull market. 

Wednesday, August 10, 2022

Charts of the Day

Interesting, while equities are partying this morning (as we expected, at least initially, if inflation came in under expectations), long-term treasury prices (first chart), after an initial surge, seem to have a different take (they will drop when long-term inflation expectations increase), as do inflation swap spreads (they will rise when inflation expectations increase [2, 5 and 10-yr featured])... Hmm....




Morning Note: Inflation, and Our Messaging, Highlights

July's CPI confirms that inflation remains at consumer-crushing levels. However, for a kneejerk market (SP500 futures up 1.75% as I type [45 minutes before the open]), it's all about expectations, and this morning's report came in a bit lower than consensus:

Tuesday, August 9, 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: Recession or No Recession, both pose a challenge for stocks...

Last night's entry to our internal market log:
8/8/2022

Oil looks interesting here after the recent comedown. Brazil looks historically attractive going forward. Metals and miners are poised to be high-probability winners for years to come. And while we can argue on behalf of a strong dollar persisting a bit longer, the setup, in my view, for the next several years lends itself to an on-balance weakening trend. Hence, cheaper and higher yielding (than US) non-US (EM in particular) equities in general look long-term relatively attractive going forward.

Monday, August 8, 2022

Morning Note: Still All About Positioning...

Per our latest video commentaries, the resiliency in equities of late smacks more of positioning than it does some sustainable sea change that would have us turning net bullish on the market's go-forward prospects from here.

Friday, August 5, 2022

Chart of the Day: Bears Hanging In...

In this morning's video I mentioned that today's rally off the lows, amid what had to be -- based on the character of the recent rally -- the last thing the bulls would've wished for (today's employment report), could've to no small degree been the result of some serious short-covering. If, that is, it didn't all get taken out during last week's rally.

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: Do Fight the Fed -- Or -- Come Hell or High Inflation

"Don't fight the Fed" has been the market mantra for as long as no doubt many a trader can remember. I.e., you may see nothing but dread when you look out across the macro horizon, but if the Fed's easing (cutting interest rates and purchasing bonds) buy stocks, with both fists!

Thursday, August 4, 2022

Morning Note: The Veering Path -- And -- Above All, Stay Patient -- And -- Be Popper's "Rationalist"

You may have noticed that, when I suggest that inflation is coming off the boil, I often make it a point to remind the reader that we are structurally bullish on inflation over the long-term from here. 

I.e., nothing with regard to our thesis has changed since I penned the following back on May 7th of this year:

Wednesday, August 3, 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: Cautious Optimism Re The Consumer

At first blush, this is a shocking headline

Tuesday, August 2, 2022

Morning Note: The Market's (maybe) Misinterpreting the Fed -- And -- "Nobody Wants to Work Anymore", a not-so historically-uncommon gripe...

As we've been stating for weeks, while our long-term structurally higher (than the past several decades) inflation thesis remains intact, the post-covid surge was/is in the process of peaking and rolling over -- although, ultimately, settling in at a level notably above the Fed's 2% target (in the absence of a deep, protracted recession, that is)...

Monday, August 1, 2022

Morning Note: Notable Improvement in Equity Market Conditions, But....

Our own Equity Market Conditions Index (EMCI) showed marked improvement throughout July.

Here are the highlights:

Sunday, July 31, 2022

Stock Market Snapshot (video)

Note: At 6:46, where I refer to "oversold" territory, meant to say "overbought."

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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.

Economic 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.

Wednesday, July 27, 2022

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: Fed to remain undeterred 'for now' by markets...

In yesterday's note I opined:
"While Powell may indeed come off tough tomorrow, his tenure thus far has been synonymous with the term “pivot.” And, make no mistake, pivot he will (but not tomorrow mind you) when he and his crew are staring down whatever breaks first..."

In terms of that "whatever" breaking; while one would think it'd be the credit markets the Fed fears the most, when we're talking investor opinion, suffice to say that all eyes are presently on the equity market. 

Tuesday, July 26, 2022

Morning Note: Hey, they're only human...

Fed chair Powell is believed by many to have held off on going after inflation while he awaited word that he’d have another 4 years at the helm -- as hiking interest rates and roiling markets would risk him losing favor with his anointers. Indeed, once confirmed, he did seem to suddenly come under the spell of a Mr. Hyde-esque mood of sorts.

Ah, human nature… politics… self-interest… Even amid the rapid rise of the worst inflation in some 40 years, one who could ostensibly do something about it was presumably frozen by abject self interest.

Monday, July 25, 2022

Morning Note: In Our Sights

In last Friday’s video commentary I mentioned that it’ll be a “target rich” macro environment in the years to come. The following entry to our internal market log touches on just one of the areas we have in our sights:

Sunday, July 24, 2022

Quote of the Day: So Why Bother?

Video viewers have heard me repeatedly pronounce that, in my humble view, despite the tough talk, Jerome Powell and company do not aim to purposely wreck the economy and the financial markets (as unavoidable as that may be) in order to halt the wrecking ball that is present day inflation. 

Friday, July 22, 2022

Quote of the Day: Mexico Gets It

Mexico is benefitting from policies that seem so utterly obvious, yet, when it comes to the developed world.. well... let's just say that the fiscal response to Covid and the monetary response to the ensuing inflation has been utterly blundered: 

"CPI inflation in Mexico is still surprisingly below US and Canadian inflation on a YoY basis. Banxico's head start to the tightening cycle and the government's fiscal restraint are two factors contributing to this lower inflation profile."

"Growth is resilient despite deteriorating global growth and liquidity. The peso is one of the top performing currencies this year." 

--Variant Perception

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: Big Money Betting on Big Volatility

JPMorgan notes that there's some not-small money making some not-small bets that volatility's going to be rising in not-small fashion over the coming months:

Thursday, July 21, 2022

Morning Note: Another 'Think' Coming...

I get the strong sense that the stock market is sniffing out some fear among Fed members. For sure, those who trade Fed funds futures expect Powell and company to turn tail and, of all things, begin cutting interest rates as soon as next spring. 

And I get it, particularly when you consider the housing market of late. We touched on last month's read on single family starts and permits (lower), and abysmal homebuilder sentiment. And yesterday's disappointing -- to the tune of 200k below expectations -- existing home sales for sure says the economy's already slowing down, amid the Fed tightening up.

Wednesday, July 20, 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: Playing Devil's Advocate...

Wow! What a rally yesterday! Clearly, investors are beginning to see blue skies ahead, right?

Well, while we're not ready to sound the all-clear right here, I will say that the latest data that instruct our views are offering up some legitimate less-bearish signaling that we need to not hastily dismiss. 

Tuesday, July 19, 2022

Quote of the Day: Scary -- in a good way...

Per yesterday morning's essay, there may be emerging developments that could have the most ardent bear reexamining his/her dire thesis right here.

Morning Note: A Long Ways From Mass Affordability...

Suffice to say that homebuilders aren't feeling so good about their prospects these days.

Here's from July's NAHB Housing (homebuilder sentiment) Index (HT Peter Boockvar):

Monday, July 18, 2022

Morning Note: Those Bullwhipping Bears

It makes sense that, as many are predicting, Q2 earnings are going to come up short of Wall Street expectations, and that to this point the bear market has been all about multiple contraction (valuations coming down). The next shoe to drop has to be earnings. Add that to growing recession risk and tightening monetary policy and our 3500 SP500 target is looking pretty thin (but, then again, read on).

Some smart macro thinkers are pointing to the above, and to what they call the bullwhip effect.

Friday, July 15, 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: Encouraging Data

Some interesting, if not encouraging, data out this morning...

Retail Sales for June came in better than expected, with net positive revisions to the May numbers:

Thursday, July 14, 2022

Morning Note: Shaking Loose the Sellers...

I'm thinking about what folks are thinking about this morning. 

Rewind two or three months and, as I recall, the sentiment vibes I was picking up during discussions with clients and acquaintances leaned somewhere between sanguine and optimistic. I.e., "It's ugly out there, but the market always comes back." And/or "Is it time to buy?"

Wednesday, July 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: Beware "the swinging of conditions"...

In Monday's morning note I suggested the following:

"...when it comes to "headline" CPI, we may see very little, if any, relief, even in the monthly number, given that energy prices ramped higher in June. The "core" number, which excludes energy, is more likely to reflect any recent letup in inflation."

Well, suffice to say, we did not see "any relief" in the headline number. In fact quite the opposite:

Tuesday, July 12, 2022

Morning Note: The 'long-term' setup for foreign equities outperformance...

Making this morning's note quick and easy with an update of the bare-bones basics as to why we -- in general -- presently find better long-term setups among non-US equity markets (vs US) going forward.

Not that we don't see pockets of long-term opportunity in certain sectors within the US market (we do), it's just that in a broader sense.... well... take a look:

Monday, July 11, 2022

Morning Note: Never that easy...

Well, folks, earnings season is upon us. And as we, and many others, have pointed out, margins have to be getting majorly squeezed due to significantly higher input costs. More so, perhaps, than what Wall Street has priced into their still optimistic earnings expectations.

Now, that said, it's never that easy. Here are a couple things to consider:

Saturday, July 9, 2022

Economic and Stock Market Snapshot (video)

As I reviewed today's video before sending, it occurred to me that I left out a few factors with regard to market probabilities that could move the needle in either direction. As you'll see, I attempted to answer the "when" question for stocks by drawing trendlines on the weekly and monthly SP500 charts. 

For starters, I want to make very clear that there'll likely be nothing linear about the path between here and the ultimate low (assuming we've not reached it yet) for the current bear market in stocks, despite the drawings I offered up. 

With regard to potentially needle-moving factors, there are of course always more than we could possibly know (i.e., anything can happen), but we're aware of a number that would likely be measurably impactful -- such as, for example, a Russia/Ukraine cease fire, China abandoning (or claiming victory over the virus due to) its Zero-Covid policy, and the passing of the pending US "stimulus" package -- at least when we're talking short-term moves in global financial markets...

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.

Friday, July 8, 2022

Morning Note: Jobs Aplenty Amid Everybody's Favorite Recession Signal - OR - Hmmmmm....

This morning's jobs number was certainly not a whiff! Coming in at 372k (vs 265k expected), although the prior two months were revised down by 74k. The unemployment rate remained at 3.6%, average hourly earnings bumped up .3% on the month and labor force participation dipped .1% to 62.2.

The 2-year treasury yield jumped on the news, signaling that it's a go for another .75% rate hike come this month's Fed meeting.

Thursday, July 7, 2022

Morning Note: This'll Sound Familiar

We tackled copper a bit in yesterday's video commentary. Bottom line, while the correction the metal's seen of late certainly makes sense, we maintain our long-term bullish view.

Wednesday, July 6, 2022

Stock Market and Copper 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: Recession Fears Rule, Although...

Yesterday's entry to our internal log covers a fair amount of important ground. Here it is in its entirety:

Note: Non-client subscribers please keep in mind that the following is shared for informational purposes only. Any reference to positioning relates only to the work we perform on behalf of our clients and are in no way whatsoever to be construed as recommendations to the general public. 

7/5/2022

An overnight rally in futures gave way to a sharp selloff in the cash session which gave way to a rally that took the SP500 back to the green (albeit barely) by the end of the session.

Tuesday, July 5, 2022

Morning Note: Hubris, Humility and History

Bespoke Investment Group began their latest weekly report with a riff:

“Been dazed and confused for so long, it’s not true...Lotsa people talkin’, few of them know...Don’t know where you’re going, only know just where you’ve been…” - Dazed and Confused, Led Zeppelin

Saturday, July 2, 2022

Chart of the Day: A lot less "stuff" being bought... but, then again...

While we remain very much in the inflation-will-be-higher-for-longer camp, we also see it coming off the boil a bit over the next few months.

At first blush, support for the latter is found in the latest data.

Note below that the only increase in consumer spending in May for goods (dark bars) occurred in energy and food. On a real basis (inflation adjusted), only household durables saw an increase in the goods space (HT BCA Research):


Now, while that's good news with regard to inflation pressures, one might say it screams recession. But one would be missing the green bars above, which measure spending on services. They increased by $72 billion in May, while goods spending decreased by $44 billion...

But wait! That last line brings the inflation worry (inflation of services costs, that is) right back to the fore, right? Yep!! That's why I said "a bit" off the boil...


Friday, July 1, 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: Seen Better Setups...

Last evening I performed the monthly scoring of our latest proprietary indicator, "The PWA Equity Market Conditions Index", and, well, I'll just say that I've seen better setups in my day.

Here's from our internal report:

Thursday, June 30, 2022

Morning Note: No Surprise Here -- And -- Funny, that faith in the Fed...

Stocks look to be ending the first half of the year with a dud -- they're trading notably lower in the pre-market. Of course the day is young...

Wednesday, June 29, 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: Dismiss the Doomsayers

The latest consumer sentiment read has folks feeling about as low as it gets with regard to the stock market right here. Now, historically-speaking, that tends to be a contrarian indicator.

Tuesday, June 28, 2022

Morning Note: Signs

Yes, our conviction remains high that inflation -- well above the past few-decade-average -- is a protracted thing going forward. And, yet, we do see it coming off the boil. Whether in a peaking or a plateauing sense remains to be seen.

A few signs:

Monday, June 27, 2022

Morning Note: Can't go there yet -- And -- Concentrated Cash

In yesterday's economic update we featured a handful of inputs to our index that as of yet don't rhyme with the recession-imminent chorus. This morning's durable goods numbers add another to that list:

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)

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.