Morning Note: "The Real Question" -- And -- Stinky Breadth

We'll save our commentary on this morning's GDP report for our weekend update, but I would like to share a quote from Peter Boockvar's summary this morning.

Emphasis mine:

"Bottom line, if only we can get a GDP read month by month because I’m pretty confident that the quarter ended weaker than it began. There were two parts to Q1, pre SVB and post SVB and the post side will be much more felt in Q2 and thru the rest of the year. As night follows day, a recession follows an expansion and it is why that while EVERYONE supposedly is expecting a recession, EVERYONE can be right as it will turn dark tonight after the light of day. The REAL question is what the extent and length will be of the recession. That is where the true differences of opinions lie. Finally, I will highlight AGAIN that each month that passes by, there is debt that is repricing at a much higher interest rate than the loan that is maturing, for both businesses and households and that will be a continued drag on economic activity as the quarters go by that will only pick up pace as more get impacted."

In Monday's note I mentioned that 2/3rds of this year's SP500 gain comes from a mere 5 stocks... Not the rising-tide-lifts-all-boats kind of setup that characterizes healthy advances, I must say. 

Stonex's macro guru Vincent Deluard punctuated that point yesterday:

Where we're really smelling bad breadth is in the "tech-heavy" Nasdaq Composite Index... The top panel below is price, the bottom is the daily advance/decline line... Such a negative divergence (index rising while the majority of its members are declining) is, let's say, NOT a bullish sign:

Stay tuned...

Asian stocks rallied overnight, with 12 of the 16 markets we track closing higher.

Europe, on the other hand, is leaning slightly red so far this morning, with 10 of the 19 bourses we follow trading down as I type.

US equity averages are rallying to start the session: Dow up 245 points (0.73%), SP500 up 0.99%, SP500 Equal Weight up 0.46%, Nasdaq 100 up 1.78%, Nasdaq Comp up 1.44%, Russell 2000 up 0.34%.

Going forward, at the request of a friend, we'll be featuring the previous day's action for US equities as well:

As for yesterday's session: US equity averages ended in the red: Dow by 229 points (0.7%), SP500 down 0.4%, SP500 Equal Weight down 0.4%, Nasdaq 100 down 0.3%, Nasdaq Comp down 0.5%, Russell 2000 down 0.9%.

This morning the VIX sits at 17.37, down 7.80%.

Oil futures are up 0.73%, gold's down 0.39%, silver's down 0.10%, copper futures are down 0.19% and the ag complex (DBA) is up 0.14%.

The 10-year treasury is down (yield up) and the dollar is up 0.21%.

Among our 37 core positions (excluding options hedges, cash and money market funds), 26 -- led by XLC (communications stocks), Amazon, AT&T, Albemarle and URNM (uranium miners) -- are in the green so far this morning... The losers are being led lower by MP Materials, AMD, TLT (long-term treasuries), DBB (base metals futures) and VGIT (intermediate-term treasuries).

"...the big money was not in the individual fluctuations but in the main movements—that is, not in reading the tape but in sizing up the entire market and its trend."

--Jesse Livermore

Have a great day!
Marty