Tuesday, August 22, 2023

Morning Note: The Market Doesn't Care How You Feel -- And -- Something Far More Pertinent

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 what 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.

In our internal discussions, I continually stress, emphatically, that if there's just one thing I can impress upon you all that absolutely has to stick, above all others, it's that we, as a firm, can never get sucked into the prevailing emotion of the markets... While everyone around you is, as always, hanging on every tick of the equity market, you simply don't give a rat's rear-end (or words to that effect) -- in an emotional sense -- to what the Dow, the S&P 500 or the Nasdaq happens to be doing on any given day. 

Yes, we'll do our technical analyses to gain insight into the prevailing mood, and, at times, adjust accordingly, but, at the end of the day, it's 100% about our commitment to our clients' emotions... That is, our charge is to allocate our clients' hard-earned, long-term assets in a manner that reflects what is our best assessment of the near and long-term global risk/reward macro setup.

In other words, as we say on our website:

"Frankly, it’s about emotion. Life’s decisions, be they financial or otherwise, are rooted in emotion. We measure our success, not in numbers, but to the extent we succeed in making our clients’ lives better at the deepest personal level."
"If our clients live their lives in comfort, if they go about their days without a financial worry, without reacting to or fretting over the inherent volatility of financial markets — if our commitment to them instills, or enhances, that sense of wellbeing — we are indeed successful as a firm."


Forgive me, but while I was struggling this morning with offering up something non-redundant about the markets, the above popped out... Ironically, in the grand scheme of things, the above is far more pertinent than anything I might've written about Nvidia's earnings announcement tomorrow, or Jerome Powell's speech on Friday... Of course you'll get that stuff in tomorrow morning's video snapshot.

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

Europe's mostly green so far this morning as well, with 16 of the 19 bourses we follow trading up as I type.

US equity averages are mixed to start the session: Dow down 130 points (0.38%), SP500 up 0.01%, SP500 Equal Weight down 0.26%, Nasdaq 100 up 0.28%, Nasdaq Comp up 0.44%, Russell 2000 down 0.34%.

As for Friday’s session, US equity averages were mixed: Dow down 0.1%, SP500 up 0.7%, SP500 Equal Weight flat 0.0%, Nasdaq 100 up 1.7%, Nasdaq Comp up 1.6%, Russell 2000 down 0.2%.

This morning the VIX sits at 17.21, up 0.47%.

Oil futures are down 0.30%, nat gas futures are down 1.71%, gold's up 0.15%, silver's up 0.40%, copper futures are up 0.89% and the ag complex (DBA) is down 0.52%.

The 10-year treasury is up (yield down) and the dollar is up 0.23%.

Among our 34 core positions (excluding options hedges, cash and money market funds), 15 -- led by EWZ (Brazil equities), DBB (base metals futures), AT&T, TLT (long-term treasuries) and SLV (silver) -- are in the green so far this morning... The losers are being led lower by XLF (financial stocks), OIH (oil services companies), XLP (consumer staples stocks), DBA (ag futures) and MP Materials.

"...your personal experiences make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works.”

--Morgan Housel (HT Hedgeye)

Have a great day!

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