Friday, February 18, 2022

Morning Note: Same Stuff For Now -- And -- The Evolution (or lack thereof) of the Human Psyche

There's virtually nothing new of import to report this morning. I.e., markets remain on edge over the Fed and the Russia/Ukraine situation.

So, for this morning, I'll start by pulling from last Thursday and Friday's notes, as they pretty much capture the mood:

Last Thursday:

"You see, the market these days sees things in a very narrow time window. And, surely, if "it" looks out just to mid-year, it fully well knows that, say, March-on, year-on-year inflation prints should come notably off the boil.

For example, last January CPI was up 1.4%, by March it was up 2.6%, by April 4.2%, by May 5.0% and by June 5.4%. So, barring an even huger ramp up in the rate of price increases than we've seen of late, headline CPI is set to moderate going forward.

And, one might expect, barring oodles of other risks -- geopolitics, mid-term election angst, the Fed tightening policy (and tighten they will [till they crack the markets]) amid weakening data, crazy high tech-sector valuations, and so on -- hitting the tape, that stocks will have a decent go of it as the reported inflation numbers abate a bit.

That said, one should in no way take those oodles of other risks the least bit lightly!
Keep in mind, we're only talking reported numbers going forward; there's, tragically, little relief on the near-term horizon for the folks who truly suffer from real-world inflation."

From another post last Thursday:

"At least one Fed governor found himself alarmed enough by this morning's inflation data to rattle markets with a call to do more, sooner, than, clearly, the equity market has priced in."

Last Friday:

"US National Security Advisor Jake Sullivan warned today that Russia could take offensive military action inside Ukraine as early as next week.

Here's from my entry to our internal research thread last Saturday:
"FYI to the team. Just listened to our premium geopolitical research source's latest client webcast. They now place 75% odds that Russia invades Ukraine (up from 50%) -- given the US's written rejection of their demands -- at any moment. Interestingly, they dismiss the notion that Putin will wait till the Beijing Winter Olympics are over. I'm thinking he'll wait.
In any event, while they don't anticipate an all-in attack, they expect something nevertheless meaningful as Putin virtually has to (well, 75% chance) advance at this point.
Highly likely that this would be a, albeit brief if the incursion isn't too deep, global risk-off event..."
I'm personally not remotely making a prediction here, just assessing conditions through the lens of folks who do geopolitics for a living... At this point I wouldn't be surprised either way; military action or 11th-hour successful negotiations..
Again, I'd instruct both short-term bulls and bears to not hold their breath right here (this market is bound to remain uber volatile, in both directions). I'd instruct portfolio managers to actively manage the risk of something potentially big to the downside going forward..."

Asian equities struggled overnight, with 10 of the 16 markets we track closing lower.

Europe's a mess so far this morning, with 17 of the 19 bourses we follow in the red as I type.

US equities are mixed, but leaning green to start the session: Dow up 41 points (0.12%), SP500 up 0.13%, SP500 Equal Weight up 0.43%, Nasdaq 100 down 0.16%, Nasdaq Comp down 0.33%, Russell 2000 up 0.26%. 

The VIX sits at 27.92, down 0.68%.

Oil futures are down 2.17%, gold's down 0.15%, silver's up 0.77%, copper futures are up 0.55% and the ag complex (DBA) is up 0.08%.

The 10-year treasury is up (yield down) and the dollar is up 0.07%.

Among our 38 core positions (excluding cash and short-term bond ETF), 23 -- led by carbon credits, Latin American equities, bank stocks, AT&T and silver -- are in the green so far this morning. The losers are being led lower by ALB (lithium miner), chip stocks, wind stocks, Sweden stocks and MP (rare earth miner).

"There has to be a reason why we constantly forget the investment lessons of the past. One of those reasons is that we are always keen to believe that we are not as stupid as our ancestors. While it is true that the sum of human knowledge is always advancing, albeit with some detours into intellectual cul-de-sacs, the human psyche is strongly influenced by greed and fear."
--Russell Napier. The Asian Financial Crisis 1995–98 

Have a great day!

1 comment:

  1. Las Vegas Casinos - JTM Hub
    Our 김포 출장샵 top picks for slots from the top 서귀포 출장샵 Las Vegas casinos 광주 출장안마 include our top pick to stay safe. From the first reels to the last 영주 출장마사지 reel, 영주 출장안마 make sure to