Wednesday, June 29, 2022

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.

I.e., as we've explored herein multitudinously over the years, you typically want to occupy the side of the boat opposite the crowd.

Throw in the latest reads from Investor Intelligence's advisor and AAII's individual investor surveys and, well, let's just say sentiment presently sits at extreme lows -- I.e., standing room only on the bear side of the boat...

So, should we therefore be raging bulls right here?

Well, perhaps, but we're not -- not just yet anyway. I wish it were that easy! Nevertheless, in terms of sentiment, given recent down-day volume, yada yada, one might conclude that a bottom's presently being formed, although we remain doubtful right here... Time will tell...

In the meantime, my advice is to dismiss the doomsayers (click-mongers) of the day. I mean, sure, things aren't great... Sure, inflation's a thing going forward.... Sure, the world's palpably divided (although division does foster cliques -- Europe and the US's united front for Ukraine, for example)... Sure, energy policy is an utter disaster the world over...  Yet, and make no mistake -- while indeed there's stuff to fret -- there is unique, if not historic, long-term opportunities hidden among the fear and the hyperbole...

Meeting with a dear friend/client yesterday, after we lamented the lamentable, I explained that while indeed there's much to, well, lament, about the state of global conditions, our job is to set aside our views of how we'd prefer things to be and see the world for what it is -- like it or not. Then deeply assess the risks and the opportunities inherent in the go-forward setup...

And while, clearly, there's much by way of the former to get our heads around and hedge against -- make no mistake -- there's unique opportunity (for the patient investor) amid the risk. The key is to, among other things, understand the incentives and constraints (much more so than the preferences and ideologies) of those making today's big policy decisions... 

Stay tuned...

Asian equities got hammered overnight, with 15 of the 16 markets we track closing lower.

Same for Europe so far this morning, with 18 of the 19 bourses we follow trading down as I type.

US stocks are mixed to start the session: Dow up 120 points (0.39%), SP500 down 0.02%, SP500 Equal Weight down 0.72%, Nasdaq 100 up 0.12%, Nasdaq Comp down 0.09%, Russell 2000 down 0.93%.

The VIX sits at 28.39, up 0.11%.

Oil futures are up 1.76%, gold's down 0.14%, silver's down 0.05%, copper futures are up 0.56% and the ag complex (DBA) is up 0.56%.

The 10-year treasury is up (yield down) and the dollar is up 0.33%.

Among our 38 core positions (excluding options hedges, cash and short-term bond ETF), 18 -- led by oil services stocks, communications stocks, tech stocks, staples stocks and treasury bonds -- are in the green so far this morning. The losers are being led lower by solar stocks, AMD, MP Materials, our semiconductor ETF and Albemarle.

"...much of what looks like chaos is in truth the product of an underlying order, in which insignificant perturbations are often the cause of predestined crashes and long-lived bull markets."
--Bernstein, Peter L.. Against the Gods 

Have a great day!

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