Morning Note: Messy

Asian equities continue to struggle this week; 13 of the 16 markets we track closed down notably overnight. European stocks are fairing better this morning with 15 of the 19 bourses we follow presently in the green. U.S. stocks are struggling just a bit to start the day: Dow down 36 points (0.13%), S&P 500 flat, up 0.06%, Nasdaq flat, up 0.03%, Russell 2000 down -0.60%.

The VIX (SP500 implied volatility) is down -0.65%, VXN (Nasdaq vol) is down -1.87%.

Oil futures are up 0.83%, gold’s up 0.03%, silver’s down -1.22%, copper futures are up 1.43% and the ag complex is up 0.37%.

The 10-year treasury is flat and the dollar is catching a bid (watch out stocks), up 0.18%.

Our core mix, lifted by Verizon, base metals, utilities, banks and energy, yet held down by silver, emerging market equities, Asia-Pac equities, healthcare and Eurozone equities is off a titch so far this morning, -0.16%.

Political and pandemic uncertainty, along with an on balance uninspiring macro backdrop makes for, to say the least, messy market dynamics for the time being.

While we can speculate till we’re blue in the face over what’s been ailing asset markets of late — amid quite the array of possibilities — there’s no denying (well, for us anyway) that a strengthening dollar is anathema to equity prices these days. 

Back on July 27th I wrote:

“Given all that’s evolved over the past several decades, given the complete carry-dependent state of the global economy, there’s only one road for the powers-that-be to take going forward; a steady, unrelenting debasement of the US dollar.”

Thus, when it appears as though the “powers-that-be” are failing at their task, risk assets are likely to struggle. Although I suspect there will be instances where the dollar and stocks will trend (for a while) in tandem; such as if/when a sizable second round of fiscal stimulus hits the markets…

Take a look (July 27th to current):

Have a great day!



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