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.

The thing about today's central bankers (well, a few select developed market central bankers, that is) is that by all appearances they really want to be liked. I mean, even where they know the fine mess they've found themselves in (or have gotten themselves [and society] into), they'll effort mightily to sugar coat the economic reality that is demanding that they pull the punchbowl.

Listen to Fed Chief Jerome Powell and you'd think the economy is firing on all cylinders, listen to the ECB's Christine Lagarde and, well, I'll hand it off to Peter Boockvar right here:

"As Christine Lagarde doesn’t see any signs of stagflation as she said today, Germany said its February PPI rose 25.9% y/o/y and by 1.4% m/o/m, although both were .3% less than expected. That is also pre war data with energy prices up 68% y/o/y. Still, non energy goods were still up between 5-8%.

Of note in bond land, the German 10 yr bund yield is up another 2.4 bps to .40%, the highest since November 2018.

Just as the Fed with their economic projections included economic pixie dust that the fed funds rate can go from zero to about 2% this year and almost 3% next but the unemployment rate is magically going to stay around 3.5% over the next 3 years, Lagarde today said “even in the bleakest scenario, with 2nd round effects, with a boycott of gas and petrol and a worsening of the war that goes on for a long time – even in those scenarios we have 2.3% growth.” Pixie dust."

Asian equities leaned red overnight (Japan was shuttered), with just over half of the markets we track closing lower.

Europe's struggling this morning, with 11 of the 19 bourses we follow down on the session, as I type.

US equities are lower to start the week: Dow down 161 points (0.47%), SP500 down 0.23%, SP500 Equal Weight down 0.53%, Nasdaq 100 down 1.05%, Nasdaq Comp down 0.93%.

The VIX sits at 24.44, up 2.39%.

Oil futures are up 5.84%, gold's up 0.76%, silver's up 1.28%, copper futures are down 0.85% and the ag complex (DBA) is up 2.03%.

The 10-year treasury is down (yield up) and the dollar is up 0.06%.

Among our 38 core positions (excluding cash and short-term bond ETF), 17 -- led by uranium miners, energy stocks, base metals miners, base metals and ag futures -- are in the green so far this morning. The losers are being led lower by emerging market equities, ALB (lithium miner), South Korean equities, semiconductor and solar stocks.

Note that the below is a 2020 quote:

"Entire countries are watching in horror as what makes them possible—global access, imported energy, foreign markets, American troops—slips through their fingers. For many, there just isn’t enough access or energy or markets or security for them to maintain what they have, much less grow.

In a world of want, the questions become: What do countries need to survive in a scrambled world? Who will shoot to get what they need? And who gets shot at?"

Zeihan, Peter. Disunited Nations . Harper Business.  

Have a great day!
Marty