Morning Note: Sell Mode

Lack of a bazooka stimulus plan happening pre-election in the U.S. and covid numbers spiking the world over has global equities in sell mode once again this morning. 11 of the 16 Asian markets we track closed lower overnight. 18 of the 19 European bourses we follow are trading down (big) as I type. U.S. major averages are off notably across the board: Dow down 630 points (-2.30%), S&P 500 down -2.26%, Nasdaq down -2.56%, Russell 2000 down -2.74%.

The VIX (S&P 500 implied volatility) is up a whopping 13.42% to a very concerning 37.83. VXN (Nasdaq vix) is up 12.17%.
A very strong dollar this morning is doing a number on commodities: Oil futures are down -5.53%, gold’s down -1.69%, silver’s down -4.79%, copper futures are down -0.99% and the ag complex is down -1.28%.
The 10-year treasury is of course catching a nice bid this morning (yield down) and the dollar’s up 0.65% (that’s big for the dollar).
While notably besting the major averages this morning, our core portfolio is nonetheless off -1.34% as I type. The yen being our only position in the green thus far in the session.
As clients and regular readers know, select commodities is a place we like going forward. It, however, is not a place void of volatility, particularly when the dollar’s in rally mode. Ironically, this is something, as I’ve previously shared herein, and with you clients during our review meetings, we’ve been looking for.
Here’s from my 10/22 entry to our “firm-wide trading log:”

“Commodities are also an obvious play relative to our thesis, one that we’ll likely increase in the months to come. In the very near-term, however, I expect a potentially dollar-driven pullback that would offer up a better entry for adding exposure. In that event we’d reduce our cash exposure to gain it.”

While today smacks of that “better entry” I mention, we’ll let this play out a bit before we make any adjustments.  

Next up our main weekly message.

Have a great day!


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