Despite growing evidence that certain bottlenecks may have eased of late --
Declining cost (although still very high) of shipping a container from Shanghai to LA:Clearing of port jams:Better balanced import and export volumes (per the latest empty container numbers):
*Chart source for last two, Bespoke Investment Group...
-- the respondents' commentary from the ISM's latest services sector survey says businesses are yet to feel much, if any, relief:
WHAT RESPONDENTS ARE SAYING
“Supply chain challenges continue at about the same levels as last month. Employment has improved as COVID-19 cases are declining. Restaurant sales have improved since Valentine’s Day, with mask and vaccine verification mandates being dropped.” [Accommodation & Food Services]
“Grain and fertilizer prices are near all-time highs, resulting in decreased purchasing.” [Agriculture, Forestry, Fishing & Hunting]
“Labor and inflation continue to push costs higher across the board for food and food-service supplies.” [Educational Services]
“Pricing pressures are stronger than ever due to the Russia-Ukraine [war], and energy costs are skyrocketing.” [Construction]
“Supply chain disruptions are still a problem due to reduced allocations and manufacturer back orders. Demand continues to outpace manufacturing capacity.” [Health Care & Social Assistance]
“Energy costs are putting a pinch on all suppliers. We have received many surcharge notices.” [Information]
“Concerns over inflation and rising energy prices are causing our company to take a cautious approach, especially related to planned capital expenditures.” [Management of Companies & Support Services]
“Long lead times for electronic components are becoming normal and expected. Chemical deliveries are often delayed due to a lack of qualified hazardous materials drivers.” [Public Administration]
“Global supply chain issues continue to disrupt chip supply, which is suppressing production of new vehicles.” [Retail Trade]
“We are still seeing raw material subcomponent shortages, transportation delays and price increases.” [Utilities]
If indeed the trends in the charts above persist (although Shanghai is presently in full Covid lockdown), I suspect we'll sense some easing of this service sector angst in next month's featured comments...
“Constrained supply of many key product groups continues. Inflation worsening. Overall sales and profitability continue to be strong.” [Wholesale Trade]
Asian equities leaned green overnight, with 10 of the 16 markets we track closing higher.
Europe's catching a bid this morning, with all but 2 of the 19 bourses we follow trading higher as I type.
US stocks, on the other hand, are lower to start the session: Dow down 86 points (0.25%), SP500 down 0.41%, SP500 Equal Weight down 0.28%, Nasdaq 100 down 0.99%, Nasdaq Comp down 0.90%, Russell 2000 down 0.52%.
The VIX sits at 22.12, up 2.69%.
Oil futures are up 0.55%, gold's up 0.29%, silver's down 0.25%, copper futures are up 0.43% and the ag complex (DBA) is up 0.86%.
The 10-year treasury is down (yield up) and the dollar is up 0.42%.
Among our 37 core positions (excluding cash and short-term bond ETF), 17 -- led by energy companies, base metals futures, ag futures, uranium miners and Paramount Global -- are in the green so far this morning. The losers are being led lower by MP Materials, semiconductor stocks, Albemarle, Latin American equities and US tech stocks.
"The big money was not in the individual fluctuations. but in the main movements. That is, not in reading the tape, but in sizing the entire market and its trend." --Jesse Livermore
Have a great day!