Monday, August 21, 2023

Morning Note: General Conditions Remain Net-Negative, and Your Weekly Results Update

Kicking off what will be another shortened week here on the blog (no posts this Thursday and Friday), we'll take a quick look at how our PWA Index scored for last week, followed by your sector, region and asset class update, then the usual morning stuff.

The US retail sales component of our index rose a notch last week, with core up 1.0% month-on-month (consensus estimate being 0.5%)... Online retail sales surprised up 1.9% month-on-month (12% year-on-year), thanks largely I'm sure to Amazon's prime day:

Mortgage purchase apps, on the other hand, gave up a point:

As did the US Housing Index (homebuilder confidence); dropping to the dividing line between expansionary and contractionary sentiment:

And the price of economically-sensitive copper, descending notably below its 50-day moving average, was a drag as well:

All told, our general conditions index gave back 4.25 points, settling at -17.02:

Suffice to say that present conditions do not yet reflect what we'd consider to be a bullish macro backdrop.

And here's your weekly results update:

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

Europe, on the other hand, is mostly green so far this morning, with 13 of the 19 bourses we follow trading up as I type.

US equity averages are mixed to start the session: Dow down 17 points (0.05%), SP500 up 0.39%, SP500 Equal Weight up 0.03%, Nasdaq 100 up 0.82%, Nasdaq Comp up 0.77%, Russell 2000 down 0.17%.

As for Friday’s session, US equity averages were mixed: Dow up 0.1%, SP500 down 0.1%, SP500 Equal Weight up 0.1%, Nasdaq 100 down 0.1%, Nasdaq Comp down 0.2%, Russell 2000 up 0.5%.

This morning the VIX sits at 17.44, up 0.81%.

Oil futures are up 0.73%, nat gas futures are up 2.98%, gold's up 0.09%, silver's up 1.44%, copper futures are up 0.18% and the ag complex (DBA) is up 0.56%.

The 10-year treasury is down (yield up) and the dollar is up 0.03%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 18 -- led by Albemarle, URNM (uranium miners), HACK (cyber security stocks), SLV (silver) and Dutch Bros -- are in the green so far this morning... The losers are being led lower by JNJ, TLT (long-term treasuries), EWZ (Brazil equities), AT&T and EWW (Mexico equities).

There's never a bad time for this from Nassim Taleb:
"The problem is that our ideas are sticky: once we produce a theory, we are not likely to change our minds—so those who delay developing their theories are better off.

When you develop your opinions on the basis of weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions, even if this new information is obviously more accurate.

Two mechanisms are at play here: the confirmation bias that we saw in Chapter 5, and belief perseverance, the tendency not to reverse opinions you already have. Remember that we treat ideas like possessions, and it will be hard for us to part with them."

Have a great day!

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