Tuesday, January 3, 2023

Morning Note: New Year Shuffling

Interesting action in the pre-market on this first day of 2023... Bonds are screaming higher (yields lower) as folks are perhaps buying into the consensus recession thesis and want to get ahead of it... The dollar is ramping higher as well, consistent with the short-term technical setup I mentioned in yesterday's video... US stocks are up as well, also per the short-term technical setup we explored yesterday, and, I suspect, a continuation of the bad-economic-setup-is-good-for-stocks (as it quells inflation and calms the Fed) trade.

While, as I did above, we can attempt to glean what we can (sentiment) from asset class moves on the first day of a new year, of course there's nothing actionable here as investors shuffle their stuff to attempt to game what everybody else is attempting to game.

Stay tuned.

Asian stocks (Japan was on holiday) leaned green overnight, with all but 5 of the markets we track closing higher.

Europe's in serous rally mode to start the new year, with all of the 19 bourses we follow trading up.

US stocks, as I type, have surrendered their pre-market gains: Dow down 84 points (0.25%), SP500 down 0.04%, SP500 Equal Weight down 0.01%, Nasdaq 100 down 0.10%, Nasdaq Comp down 0.06%, Russell 2000 up 0.21%.

The VIX sits at 23.31, up 7.57%.

Oil futures are down 1.20%, gold's up 1.16%, silver's up 1.49%, copper futures are up 0.55% and the ag complex (DBA) is down 0.30%.

The 10-year treasury is up (yield down) and the dollar is up 0.77%.

Among our 36 core positions (excluding options hedges, cash and short-term bond ETF), 26 -- led by treasury bonds, Mexico equities, silver, European equities and Disney -- are in the green so far this morning. The losers are being led lower by Brazil equities, Dutch Bros, energy stocks, Albemarle and consumer staples stocks.

I'll go to one of my favorite go-to quotes to start the year:

"People get all excited about the price movements, but they completely misunderstand that there is a bigger picture in which those price movements happen. Price movements only have meaning in the context of the fundamental landscape. To use a sailing analogy, the wind matters, but the tide matters, too. If you don’t know what the tide is, and you plan everything just based on the wind, you are going to end up crashing into the rocks."

--Colm O'shea

Have a great day!

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