Tuesday, February 27, 2024

Stock Market Snapshot: Not What An Early-Stage Bull Market Typically Looks Like (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 'F' Word -- And Your Weekly Results Update

If you're getting tired of hearing about inflation, or the potential lack thereof going forward, sorry, this will be a top topic of discussion for I suspect many years to come.

As for the time being, recent "hotter" than expected CPI and PPI -- potentially PCE this week -- notwithstanding, I do believe that before the current cycle runs its ultimate course, those who, on behalf of their stock positions, pray for dis(or de)flation will indeed see their prayers answered in the affirmative.

Thing is, beyond the knee-jerk rally that'll no doubt come on "cooler" inflation data and sweettalk from the Fed, there's, alas, that 'F' word that'll ultimately be rolling off the tongues of many a Wall Street analyst, economist, market guru, yada yada!

Sunday, February 25, 2024

Pockets Of Strength, What the Fed -- Despite Their Panicky Impulses -- Hopes to Avoid, and Ubiquitous Copper (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.

Friday, February 23, 2024

Game Still On For AI Stocks, And An Overall Equity Market, Yields and Dollar Snapshot (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.

Thursday, February 22, 2024

Morning Note: While Some Key Conditions Improve, Leading Indicators Still Warn, And Healthcare Well-Positioned

The following from BCA's narrative around this week's US Leading Economic Indicators (LEI) release should sound very familiar to clients and regular readers:

"Indeed, the US economy has been robust and the data do not point to an imminent recession. Financial conditions have eased, home prices have risen and consumer sentiment has rebounded. All these factors are supporting economic activity.

However, our base case remains that a recession is likely in late 2024 or early 2025. Beneath the surface of the resilient labor market, some of the leading indicators are weakening. Similarly, default rates on credit cards and auto loans have risen and the tailwind from excess pandemic savings is fading.

Tuesday, February 20, 2024

Stock Market Snapshot and a Look at NVDA's Technical Setup (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: “Beware the Ideologue” And Your Weekly Results Update

Not much to add this morning to our weekend video update, except perhaps the following on objectivity, and humility (absolute must-have qualities if one is to be a successful investor) from William Bernstein's outstanding volume The Delusions of Crowds: Why People Go Mad in Groups:

“…the more points of view a group brings to bear on an estimate, the more accurate that estimate is liable to be. Diversity of opinion also benefits the individual as well; as put by F. Scott Fitzgerald, “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.” 

Over the past three decades, psychologist Philip Tetlock has examined the forecasting accuracy of hundreds of well-regarded experts; he found that those who took into account a wide variety of often contradictory viewpoints performed better than those who viewed the world through a single theoretical lens. In plain English: beware the ideologue and the true believer, whether in politics, in religion, or in finance.”

Sunday, February 18, 2024

Labor Hoarding, Households and Homebuilders Happier, Small Businesses Not, Inflation Forces and Some Corporate Commentary (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.

Friday, February 16, 2024

Stagflationish Data, Sentiment Extreme, When We'll Be Buyers, And That Dangerous Soft-Landing Narrative (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.

Thursday, February 15, 2024

Morning Note: Hints of Stagflation, And Some Key Highlights

In our last video commentary I mentioned the term “stagflation” — a stagnating economy amid sticky, or rising, inflation — as a distinct go-forward possibility.

Well, this morning’s data releases certainly don’t conflict with that concern.

As for the economy side of that narrative*:


That's quite the miss: -0.8 month-on-month for headline vs -0.1 expected (plus a -2% revision for December) -- as well as a -0.5% print against +0.2% expectation for core (ex-cars and gas).

As for inflation:


Again, quite the miss: Import price expectations were for a decline of -0.1% month-on-month; what we actually got was a whopping 0.8% increase. As for exports, prices also popped 0.8% m-o-m, vs a -0.2% expectation... On a year-on-year basis, prices did contract, but at a bit slower pace than the previous print.

*Note, a potential factor to consider that may have impacted the retail sales numbers was the messy January weather.

Stay tuned...


Here are some key highlights from our latest messaging herein:

Wednesday, February 14, 2024

Beyond the Short Term, Today's Hot Inflation Print Is Not the Big Risk for Stocks (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.

Tuesday, February 13, 2024

Morning Note: On the Other Hand.....

Yesterday I shared a thread by BCA Chief Strategist Peter Berezin, who now sees likely weakness among US consumer and, thus, the US economy as well in the coming months... That scenario would be met with falling yields.

Today, in contrast, I'm offering up the alternative scenario from Bianco Research's Jim Bianco, who sees no recession this year, and anticipates rates breaking to the upside over the coming weeks.

As we've expressed herein, the market's in a tough spot right here... In the recession scenario, corporate earnings take a hit, and, believe me, stocks are in no way priced for it right here... In a no-recession scenario, yields do not decline -- per the below, according to Jim they rise -- and, alas, stocks are in no way priced for that either, per this morning’s initial reaction to January’s CPI print:

Monday, February 12, 2024

Morning Note: "Consumer Reality Tour" -- And Your Weekly Results Update

BCA chief strategist Peter Berezin was not in the heavily-crowded recession camp last year... He estimated -- correctly! -- that, despite the plethora of leading indicators screaming otherwise, the consumer's momentum and resources would keep the economy chugging along throughout 2023.

Per the below, his 2024 analysis paints an altogether different picture:

Friday, February 9, 2024

Receding Recession Risk in Context, And Why Stock Market Breadth Matters (video)

Clients, here's another important one to take in when you have a few minutes... Thanks! Have a Great Weekend!

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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.

Stock Market Snapshot: A Quick Look at the Technicals (video)

Just a quick note in front of today's brief video update (click "read more" below to view).

I don't believe we can over-emphasize how unusual, and unhealthy, the internal breadth setup has been for the equity market.

As I stated yesterday, the Nov/Dec rally of last year was actually very healthy from a breadth perspective, but as we entered the new year it quickly, and dramatically, deteriorated... And this morning's action is no exception.

As I type, the S&P 500 is up 0.29%, however 58% of its members, and 8 of its eleven sectors, are in the red... The Nasdaq 100 is up 0.75%, while 47% of its members, and 6 of its ten sectors, are in the red as well... The S&P 500 Equal Weight Index is actually down 0.14% on the morning (which jibes with the breadth readings).

In my next video (which you'll receive in your inbox tomorrow morning) I'll, once again, offer up some historical context that illustrates why this is on our radar.

Thursday, February 8, 2024

Morning Note: An Improving, Yet Dubious, Setup

In thinking through the dynamics of the past few months, I come up with 2 key observations/assumptions.

1. The impressive rally in the equity market last November and December reflexively showed up in some improved data, as it clearly reignited animal spirits among businesses and consumers (the latter in particular).

For example, here are the latest sentiment readings on the consumer: 

Conference Board Consumer Confidence:

Tuesday, February 6, 2024

While Equity Mkt Conditions Ain't Pretty, Financial Conditions Have Eased -- But Be Careful What You Ask For! (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: Equity Market Conditions Rolling Back Over

Per the following intro to our latest Equity Market Conditions Analysis, which reflects in the scoring of our own Equity Market Conditions Index (EMCI), after a notable improvement heading into January, our assessment of equity market conditions has since rolled back over -- taking it deeper into the red.

Please keep in mind that this monthly analysis is in no way designed, or intended, to be a market timing indicator... But rather, it serves as a general assessment of the present risk/reward setup for primarily the US equity market; as history has proven, time and again, that stock market action -- in either direction -- can defy fundamental logic for extended periods of time.

Ultimately, however, and make no mistake, even in a world where powers-that-be strive mightily to keep asset prices elevated, fundamentals do tend to matter! 

Now, all of the above, and the below, said, we have seen some recent improvement in overall economic conditions -- i.e., odds still favor recession going forward, but less-so of late... This is something we're of course paying very close attention to.

Our bottom line: Our aim here at PWA is to manage our clients' long-term assets in a manner we deem most prudent from a risk/reward perspective, given our deep, ongoing assessment of global macro conditions.

Monday, February 5, 2024

Morning Note: Tops are Choppy -- And Your Weekly Results Update

So, if you're paying attention to the markets, and you have feelings about what you're hearing and seeing, I strongly encourage you to take in our twice per week videos! While, granted, I can get overly technical, I promise, you will always get the main message.

Here's from this weekend's (recorded Friday):

"I don't mean to sound like such a skeptic folks, I just want to articulate what tops look like; tops in the economy, tops in the markets, and so on... Tops are difficult, they are choppy, they can take a long time... Once they give up the ghost they can be quite dramatic to the downside... What do they say? "They take the escalator up and the elevator down."  And I'm not promising that there is an elevator down scenario in our near-term future, I'm just saying that the risk remains very high, and there's nothing about today's action that changes that." 
In fact, per the video, the character of "today's action (Friday's)" actually confirms that the risk remains high.


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

Friday, February 2, 2024

Stocks Went Up Today, Or Did They? Amazon/Meta Thoughts, Stock-Price Shepherds, and A Confusing Jobs Report (video)

Clients, here's an important under-the-surface analysis to be sure and take in!

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.

Thursday, February 1, 2024

The Fed's Conundrum... Investor Amnesia? Is This Time Different? And An Investable Regime to Come! (video)

Note, yesterday's price action (strong by the close) in equities accurately anticipated strong earnings results out of Meta and Amazon (not so much from Apple) that carried over into post and pre-market futures trading. However, this morning's shockingly strong jobs number (nearly double the consensus expectation) -- doing quite the upside number on yields and the dollar -- has taken virtually all but a handful of tech stocks (that dominate the S&P and the Nasdaq) into the red as I type (26 minutes after the open). 

While the day is still young, literally 79% of the stocks in the S&P, and 76% of those in the Nasdaq are presently in the red.

Now, as we'll explore in this week's economic update, while the monthly jobs number is important, and often market-impacting, make no mistake, it is very much a lagging indicator, as it covers the previous month, plus revisions for the months leading up to it... Weekly jobless claims (higher than expected yesterday), and job openings and quits rates (rolling over), are historically very good leading labor market indicators.

I.e., while December's numbers were indeed impressive (although bearish for markets yearning for Fed cuts), their sustainability is in serious question going forward.

Yesterday's video (below) is not one to miss:

Morning Note: The Ultimate/Obvious Conundrum

Yesterday's QRA (we've explored this topic herein this week) wasn't quite what the market (the bulls) expected, but it nevertheless didn't seem to move the needle when released -- i.e., it didn't move the S&P and the Nasdaq -- suffering from disappointing news from the tech space -- out of their pre-market red.

As the morning progressed, news came out that New York Community Bancorp reported a surprise Q4 loss and a cut to its dividend... Commercial real estate loan exposure was the culprit, which, as you might imagine, spooked equities and kept a bid under bonds.

Then came the Fed announcement, that essentially poured cold water all over the bulls' notion that rate cuts are to begin come March.