Tuesday, August 29, 2023

Key Highlights

Here are some key highlights from this month's messaging herein, followed by our usual morning lineup:


"Per the below, the concentration in the US equity market is, let's say, historic:

So, a "normal" market, this year's ain't! Imagine what a little reversion to the mean, or a return to normalcy, might look like... And, make no mistake, you can view that from a bearish or a bullish perspective... General conditions have us remaining a bit cautious right here."

Tuesday 8/22:

"Thinking via my keyboard this morning, pondering markets and the inherent myopia that inflicts all things media, and, by extension, those who, therefore, fuss and fret over every headline, every utterance of Jerome Powell and every pundit's interpretation of every data release -- typically clinging to those assessments that satisfy their present portfolio positioning and/or their emotional and, alas, political biases -- I'm no less struck, and humbled, by it all than I was on my very first day, August 1, 1984.

The thing to always keep in mind about markets is that they do not care about what's on your mind, about what you want, or how you feel... They are simply going to give you a price that the last two parties (the buyer and the seller) settled on... And whether either of those parties share your objectives, your time horizon, your desires, needs, fears and so on, well, of course you'll never know... Safe, I imagine, to assume not."

Tuesday 8/8:

"...the problem for the unsuspecting investor is that -- in the land of financial pundits -- there, alas, seems to be an unwritten rule that says they gotta pick a side... And when pundits get themselves gigs on major financial news programs, it's as if they're campaigning on behalf of whatever their bias may be... And, man, can they be convincing!

I.e., you gotta be bullish or you gotta be bearish, can't be both, and can't be neither.

Well, frankly, I fully reject the notion that you can't be neither... In fact, under present circumstances -- given that both narratives possess plausibility -- if we're talking folks like us who are tasked with caring for other people's money, it is grossly irresponsible, if not negligent, to pick a side.

I.e., in our view, the only prudent path, until more clarity is achieved, is to diversify in a manner designed to capture a chunk of the upside should the bullish narrative play out, and to mitigate a chunk of the downside should the bearish case ultimately take hold over whatever's left in the current cycle."

Friday 8/4:

"Bottom line: Given what are historically-high US equity market valuations, what remains relatively tight monetary policy, generally high geopolitical risks, notably uncertain economic conditions (above average recession odds, per the PWA Index, on a 6-12 month outlook), lopsidedly bullish market sentiment (surveys), and, on-balance, tight credit market conditions, odds that the positive market action of late ultimately turns out to be a classic “blowoff top” are too elevated for us to add measurable risk to our current core allocation.

Hence, we believe it remains most prudent to hedge any extreme downside risk by actively/prudently managing our SPX put positions, and by maintaining our current overweights to cash, to gold, to staples and healthcare equities for the time being."


Asian stocks rallied again overnight, with 14 of the 16 markets we track closing higher.

Europe's green across the board so far this morning, with all 19 bourses we follow trading up as I type.

US equity averages are higher to start the session: Dow by 107 points (0.31%), SP500 up 0.49%, SP500 Equal Weight up 0.24%, Nasdaq 100 up 0.91%, Nasdaq Comp up 0.75%, Russell 2000 up 0.29%.

As for Yesterday’s session, US equity averages closed higher: Dow up 0.6%, SP500 up 0.6%, SP500 Equal Weight up 0.7%, Nasdaq 100 up 0.7%, Nasdaq Comp up 0.8%, Russell 2000 up 0.8%.

This morning the VIX sits at 14.78, down 1.99%.

Oil futures are down 0.47%, nat gas futures are up 0.68%, gold's up 0.32%, silver's up 0.99%, copper futures are up 0.46% and the ag complex (DBA) is up 0.32%.

The 10-year treasury is up (yield down) and the dollar is down 0.17%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 26 -- led by AT&T, SLV (silver), Albemarle, ICLN (clean energy stocks) and Dutch Bros -- are in the green so far this morning... The losers are being led lower by Range Resources, EWW (Mexico equities), XLE (energy stocks), OIH (oil services companies) and URNM (uranium miners).

"The key word is “calibrate.” The amount you have invested, your allocation of capital among the various possibilities, and the riskiness of the things you own all should be calibrated along a continuum that runs from aggressive to defensive. . . . When we’re getting value cheap, we should be aggressive; when we’re getting value expensive, we should pull back."

--Marks, Howard. Mastering The Market Cycle: Getting the Odds on Your Side


Have a great day!

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