Tuesday, October 3, 2023

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:

Speaking of bonds, and of mean reversion, Crescat's Tavi Costa illustrates, with a jaw-dropping set of jaws, the massive divergence between stocks (well, 7 stocks) and bonds so far this year.

Of course I can ramble on, but I think the picture speaks for itself.

"Bottom line: While, with the future (near-term, and into the next cycle) in mind, we're making tactical adjustments at the margin -- (increasing cash [treasury money mkt fund] and maneuvering a few other exposures, while picking up additional yield in the process) -- staying diversified, hedged, and, most of all, patient, makes the most sense to us right here."

Stay tuned.

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

Asian stocks sold off overnight, with 14 of the 16 markets (3 are shuttered for holiday week) we track closing lower.

Europe's red so far this morning as well, with 15 of the 19 bourses we follow trading down as I type.

US equity averages are down to start the session: Dow by 260 points (0.78%), SP500 down 1.03%, SP500 Equal Weight down 1.00%, Nasdaq 100 down 1.34%, Nasdaq Comp down 1.35%, Russell 2000 down 1.29%.

As for yesterday’s session, US equity averages were mixed: Dow down 0.2%, SP500 up 0.1%, SP500 Equal Weight down 1.11%, Nasdaq 100 up 0.8%, Nasdaq Comp up 0.7%, Russell 2000 down 1.6%.

This morning the VIX sits at 18.99, up 7.84%.

Oil futures are up 0.33%, nat gas futures are up 2.36%, gold's down 0.03%, silver's up 0.51%, copper futures are down 0.43% and the ag complex (DBA) is down 0.72%.

The 10-year treasury is down (yield up) and the dollar is up 0.19%.

Among our 35 core positions (excluding options hedges, cash and money market funds), 3 -- AT&T, Range Resources and XLB (materials stocks) -- are in the green so far this morning... The losers are being led lower VNM (Vietnam equities), REMX (rare earth miners), Albemarle, DBB (base metals futures) and VPL (Asia-Pac equities).

Unequivocally, if we interpret "human" as "emotional,"

"The human side of every person is the greatest enemy of the average investor or speculator."  --Jesse Livermore

Have a great day!

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