Tuesday, June 20, 2023

Morning Note: Key Quotes, and Charts, and Your Weekly Results Update

Like I said last week, the current equity market setup, in many respects, is as toppy as it's been since the top hit January of last year... Here, from BofA, is yet another example (concentration amid a handful of stocks):

And, apparently, per Deutsche Bank, the bull side of the stock market boat is indeed getting a bit crowded right here:

Investor, philanthropist, and market historian extraordinaire, John Hussman, touches on another development that we touched on recently:

 “Yep - multiple sessions with S&P 500 and VIX both rising are definitely toppy when bullishness is high and participation is tepid. Suggests speculation is over its skis. May not be "the" top but the only other instance in data outside of this chart was the March 2000 bubble peak.” 


The Visual Capitalist's "Elements" newsletter points out a historic valuation disconnect that makes commodities look very cheap relative to equities... Which, as clients know, jibes very much with our long-term macro thesis:

"Commodities vs Equity Valuations (1970–2023)

In recent years, commodity prices have reached a 50-year low relative to overall equity markets (S&P 500). Historically, lows in the ratio of commodities to equities have corresponded with the beginning of new commodity supercycles.

The infographic above uses data from Incrementum AG and Crescat Capital LLC to show the relationship between commodities and U.S. equities over the last five decades."


And here's yours truly replying to a comment on last Friday's post:

"When, for example, there's a 50% chance of a blizzard over a given time period, and at a certain altitude, you simply don't go hiking up there until the forecast clears... Whether the blizzard occurs in the meantime means absolutely nothing... Even if it doesn't snow, not hiking up there (given the risk in the forecast) was 100% the right decision."

In an investing context: 

"...if one stays consistent and always makes such thoughtful decisions, the odds of one ever going broke are greatly reduced...  As, make no mistake, there will be financial blizzards that will materialize in our future; whether or not one occurs in the coming months remains to be seen, but, as we continue to point out, odds are such that prudence is presently warranted."


Weekly Results Update:






Asian stocks were mostly red overnight, with 10 of the 16 markets we track closing lower.

Same for Europe so far this morning, with all but 2 of the 19 bourses we follow trading down as I type.

US equity averages are lower to start the session: Dow down 190 points (0.55%), SP500 down 0.46%, SP500 Equal Weight up 0.09%, Nasdaq 100 down 0.30%, Nasdaq Comp down 0.31%, Russell 2000 down 0.68%.

As for Friday's session, US equity averages closed lower: Dow by 0.3%, SP500 down 0.4%, SP500 Equal Weight down 1.31%, Nasdaq 100 down 0.7%, Nasdaq Comp down 0.7%, Russell 2000 down 0.7%.

This morning the VIX sits at 14.36, up 6.06%.

Oil futures are down 1.92%, gold's down 1.00%, silver's down 3.40%, copper futures are down 0.44% and the ag complex (DBA) is down 0.41%.

The 10-year treasury is up (yield down) and the dollar is up 0.36%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 5 -- led by EWZ (Brazil equities), TLT (long-term treasuries), Johnson&Johnson, EMB (emerging mkt bonds) and VGIT (intermediate-term treasuries) -- are in the green so far this morning... The losers are being led lower by SLV (silver), XLE (energy stocks), MP Materials, EZA (South African Equities) and OIH (oil services companies).

"In the complex world, the notion of “cause” itself is suspect; it is either nearly impossible to detect or not really defined—another reason to ignore newspapers, with their constant supply of causes for things."   
--Taleb, Nassim Nicholas. Antifragile

Have a great day!
Marty


No comments:

Post a Comment