Morning Note: “Confusion Is Our Salvation”

Interest rates and the dollar are up, stocks are up, yesterday’s darling, silver, is tanking and, just an FYI, last week’s darling GameStop is getting demolished — as I type.

Now, interest rates and the dollar up (like yesterday), are, make no mistake, under present circumstances, longer-term anathema to stocks, and, not to mention, commodities as well. 

So, while commodities (save for oil) are (unlike yesterday) appropriately buckling their knees this morning, stocks are rallying like its 1999 (yes, literally, like it’s ‘late’ 1999).

One could argue that the market rally this morning is all about the democrats saying no way to the republican’s watered-down stimulus proposal. Although many of the headlines credit the drubbing a number of those day-trader darling stocks are taking, suggesting that they won’t succeed in bringing down the hedge fund community, and, not to mention, their favored trading platform along with it. I’d say that news out of Japan’s and Australia’s central banks — that money printing and bond buying is absolutely here to stay — isn’t hurting global equities one bit this morning either. Or, hey, last week saw a nice dip, taking the major averages into the red on the year — so, buy the dip!

Bottom line, for whatever reason(s) stocks are back in rally mode amid a dangerously high VIX, miserable sector breadth (although better so far this week), rising interest rates and a higher dollar. Well, okay then, fasten your seatbelts!

All but 2 of the 16 Asian markets we track closed notably higher overnight.

Europe’s following right along this morning, with 17 of the 19 bourses we follow in the green.

U.S. major averages are nicely higher to start the day as well (although not so much for the Russell 2000): Dow up 529 points (1.75%), SP500 up 1.50%, SP500 Equal Weight up 1.38%, Nasdaq up 1.27%, Russell 2000 up 0.06%

The VIX (SP500 implied volatility) is down 11.90%. VXN (Nasdaq i.v.) is down 9.08%.

Oil futures are up 2.80%, gold’s down 1.40%, silver’s down 7.16%, copper futures are down 0.84% and the ag complex is down 0.06%.

The 10-year treasury is down (yield up) and the dollar is up 0.22%.

Led by oil services, energy, financials, industrials and banks, but dragged heavily by silver, gold, base metals, the yen and ag commodities, our core portfolio is up 0.32% to start the day.

The following from David Hawkins best seller, Letting Go, isn’t about investing — oh, but it is!!

“We follow ritual and dogma and zealously practice spiritual discipline—and we crash once again! Even when it works, the ego quickly comes in and we are caught in pride and smugness, thinking we have the answers.”

“Confusion is our salvation. For the confused, there is still hope. Hang on to your confusion. In the end it is your best friend, your best defense against the deathliness of others’ answers, against being raped by their ideas. If you are confused, you are still free.” 

Have a great day!


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