Morning Note: Key Highlights and The Ills of Intervention

Key highlights from our latest messaging:

Yesterday:

...according to the technicals, odds favor a near-term rally in equities, according to the fundamentals, continued caution is very warranted.

Morning Note: Sector, Region and Asset Class Results Update

Our last 2 video commentaries pretty well cover our view of the short and long-term scheme of things... I.e., according to the technicals, odds favor a near-term rally in equities, according to the fundamentals, continued caution is very warranted.

In case you missed them:

Technicals Point To A Near-Term Rally, But, Ultimately.....

 

The Consumer, Market Signals, Earnings Call Insights and Yes, We're "Late in the Game"

And here's your weekly sector, region and asset class results update:

The Consumer, Market Signals, Earnings Call Insights and Yes, We're "Late in the Game" (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Technicals Point To A Near-Term Rally, But, Ultimately....... (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Ambiguity Remains

While Q3 GDP came in better than expectations, its underlying inflation gauge came in softer than expected... Combine the latter with higher than anticipated weekly unemployment claims (particularly continuing claims, as I highlighted in last Friday's economic update), and a clearly dovish ECB monetary policy statement, and you get a knee jerk market reaction which entirely comports with our short-term view (bad economic news = short-term good news for stocks).

Here's SP500 futures action so far this morning -- it's presently10 minutes before the open (the green arrow points to the moment the GDP and jobless claims numbers were released):

Magnificence Questioned, AI Angst, Stocks, Yields, the Dollar, What's Inspiring Gold, and What Good Investors Do (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Beyond the Time Being

Long-term treasuries rallied yesterday, seemingly sparked by Bill Ackman’s assertion that the world is simply too risky to be short bonds right here… While, per below, his comments did inspire some buying, I have to believe that, at these levels, investors are poised to pounce on treasuries on any sign of economic weakness going forward… And that’s despite the high level of issuance to come.

Ackman tweeted his comments at 6:45am.

Here's TLT (long-term treasuries) yesterday, I circled 6:45am:

Morning Note: Not So Fast On That New Bull Market Call, And Your Weekly Sector, Region and Asset Class Results Update

If you've been tracking our weekly results updates you've noticed, of late, a growing shade of red... As we've maintained since the October '22 bottom, macro dynamics have remained such that a next leg down carries odds too high to ignore.

Now, many on Wall Street have taken the stance that the bear market is over and done, and that a new bull market is just getting underway.

Economic Update: Housing, Jobs and The Yield Curve (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Quite A Bit Yet To Play Out, and a Look at Stocks, Yields, Gold & the Dollar (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Suddenly, A Little Demand for Long-Term Treasuries

Just a quick note this morning; anything more from me today would be simply redundant.. I.e., not much more to report beyond our latest written and video messaging... Not much, that is, other than yesterday's 20-year treasury bond auction, which came as quite the surprise to the market, and, given the messes that were last week's auctions (mentioned in Friday's important video update), to yours truly as well.

Interesting Action Across Asset Classes (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: The AI Hype Problem, And Surprising Retail Sales

Two points I'd like to make in the opening to this morning's message:

1. I am indeed in the camp that believes AI is a real long-term game-changer.

2. Like I said yesterday, "... today's CEO has been reduced to little more than shepherd of his/her company's stock price (quoting Julian Brigden)"

Now, with regard to my view of AI, the operative words there are "long-term."  In the short-term, however, per last Monday's Wall Street Journal, there are issues that those Q2 earnings calls conveniently failed to mention (or at least emphasize).

Morning Note: That Ultimate Inflection Point, and Your Weekly Results Update

So, Q4 of the year is known for its friendliness toward the stock market... And, from a sentiment and Fed-speak standpoint, one could argue that -- geopolitical turmoil aside -- the 2023 Q4 setup isn't all that bad... I certainly don't think that Q3 earnings results, by themselves, will pose a challenge to the near-term bullish narrative.

Economic Update: Will Folks Keep Paying Twenty Bucks For a Breakfast Burrito? (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Gotta Get the $ Right, Beware the Outlooks, And a Check On Stocks, Treasuries, Gold, USD Technicals (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Inflation, Fed (for the moment) Calming Waters, and Key Highlights

So, headline CPI came in a titch hotter than expected, while core (ex-food and energy) came in bang on expectations... Stocks flinched a bit in the premarket, then settled slightly higher ahead of the open... Bonds took a bit of a hit (yields up), but, all in all, while, say, 2 weeks ago this report might've rattled markets (although the day is very young as I type, so, you never know), Fedheads seem to have, for the moment, calmed market waters with their unanimous hints that they're pretty much done hiking rates... In fact, two more overnight (just ahead of fresh CPI data no less), echoed that chorus.

We'll tackle CPI and the rest of the week's data in tomorrow's economic update.

In the meantime, here are a few key highlights from our latest messaging herein:

Constructive Technicals, But There's This Fundamental Problem (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Careful With That Conviction

On our strategy call yesterday morning, while I traveled between offices, we noticed the abrupt intraday turnaround (akin to last Friday's) in the equity market... My comment, without looking, was that it virtually had to be someone at the Fed saying something soft about go-forward monetary policy.

Sure enough, the typically-hawkish (higher rates advocate) Fed Vice Chair Phillip Jefferson essentially turned the tide with:

Morning Note: Sector, Region and Asset Class Results Update

Goes without saying, there’s much to unfold in the days ahead related to tragic weekend events… The uncertainty will reflect across asset classes, oil and “safe havens” in particular.

Stay tuned.

Here’s your weekly sector, region and asset class results update:

Economic Update, and Explaining Today's Rally (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Some History, and What the Future Setup Has In Store (video)

As you'll gather from this morning's video commentary (recorded last evening), yours truly was anticipating a "soft" jobs number this morning, and, as bad news is, for the moment, good news, a rallying stock market to go with it.

Well, scratch that!  The number came in literally double the consensus estimate, and an astounding 100k above the most aggressive upside prediction... And, to top it off, the prior 2 months were revised up by 119k.

Now, that said, there was some softness that, when "the market" digests it, just might mitigate a bit of the premarket selloff we're seeing across equities and bonds... That softness came in what matters most in terms of inflation, average hourly earnings... They were up 0.2% month-on-month; consensus estimate had it at 0.3%.

Interestingly, gold is up .16% (silver's up 1.4%) premarket, despite a notable jump in real yields -- perhaps precious metals traders are already sniffing out that "softness" (although the morning's very young).

Anyways, here's your end of week market analysis... In this one I take you way beyond the latest action... We'll tour the past few market cycles, what worked, what didn't, and I scratch the surface on how one money manger (us) is presently addressing near-term dynamics, and what we're anticipating beyond the present cycle.

Once playing, click the icon in the lower right corner for full screen. Focus should occur after a few seconds; if not, click the wheel to the left of the YouTube icon to adjust:

Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Bad News is (only for now) Good News, No Need For Another Hike, and A Rally Right Here Would Not Be One (for the prudent investor) to Chase!

This from Investopedia on yesterday's equity market action speaks to our latest messaging (video commentaries in particular):

"Index Rises as Hiring Slowdown Eases Fed Rate Hike Worries"

Yes, "hiring slowdown" is consistent with economic slowdown, and, yes, "the market" is obsessively focused on the Fed, as if the thing that ultimately matters most, corporate profits, does not in fact matter.

In our view, another rate hike is highly unlikely, as it is highly unnecessary, given that leading indicators are signaling uncomfortable odds of recession (and, thus, falling inflation) in the months to come.

Among our recent video commentaries, this one from September 15th is a must-watch (at least from the 4:00 to 14:20 mark) for those interested in a historical perspective on why -- despite what current trading action might otherwise portend -- an inflation-slaying economic slowdown will be problematic for stocks, even while the Fed is cutting rates in response:

Key Near-Term Support Level Approaching, and a few other things to consider (video)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.

Morning Note: Jaw Dropping Divergences, and Your Weekly Asset Class, Etc. Results Update (and a must-read quote)

Peruse the numbers in your weekly results update below and you'll notice, among equities, that 5 of the 11 major US sectors remain notably in the red year-to-date, while three of the positive 6 have delivered low single-digit returns... I.e., as we continue to stress, all of the heavy lifting has occurred in 3 sectors that essentially capture the half-dozen or so biggest positions in the S&P 500 and Nasdaq 100 Indexes, that, per Jim Bianco, pretty much tell the whole story:

Morning Note: A Still-Difficult Equity Market Setup

Here's the intro to our latest (internal) equity market conditions report:

9/30/2023 PWA EQUITY MARKET CONDITIONS INDEX (EMCI): -58.33 (+8.34 from 8/31/2023)

SP500 Index September 2023 Result, -4.87%:

SP500 Equal Weight Index September 2023 Result, -5.26%:

Consistent with EMCI’s latest scoring, September proved to be the worst month of 2023 for US equities.