Morning Note: The Irony

Man, the irony, for the moment, is thick… 

Aside from the disappointing jobless claims number this morning, the outlook for the economy is borderline giddy — yesterday’s retail sales number (yes, those $600 stimulus checks got spent), and the projected GDP bounce to come (off of a ghastly year-ago low of course), has Wall Street salivating. Yet, stocks are looking more and more fragile as the days wear on… Hmm…

Is it that “the market” is beginning to understand that without what would have previously been considered unfathomable levels of free money to consumers, we’d be deeply into the worst recession in a hundred years? And that with all of this “stimulus” comes virtually nothing sustainable?

And/or is it that when the government does actually put some spending to productive use (infrastructure by the trillions), the present setup virtually demands an accompanying rise (further rise) in inflation — and, thus, interest rates?

I spent ample time on the latter in this week’s main message. Be sure to take it in if you haven’t already!

Stay tuned…

Asian equities got trounced overnight, with 13 of the 16 markets we track closing lower.

Europe’s no better this morning: 16 of the 19 bourses we follow are notably red as I type.

U.S. major averages are red across the board to start the day: Dow down 264 points (0.84%), SP500 down 0.95%, SP500 Equal Weight down 0.83, Nasdaq down 1.37%, Russell 2000 down 0.89%

The VIX (SP500 implied volatility) is up 10.0%, VXN is up 7.11%.

Oil futures are down 0.36%, gold’s down 0.11%, silver’s down 1/04%, copper futures are up 1.88% and the ag complex is up 0.23%.

The 10-year treasury is down (yield up) and the dollar is down 0.26%.

Base metals, utilities, ag commodities and the yen are our core portfolio’s only green positions to start the session. The main drags are oil services, emerging market equities, energy, miners and Asia-Pac equities. All in we’re off 0.78% as I type…

Suffice to say that today’s raging stock market bull is a most linear thinker. And who can blame him/her? The powers-that-be are utterly desperate to circumvent the business cycle. 


“Invariably, investors who disregard where they stand in cycles are bound to suffer serious consequences.”

–Howard Marks

Have a nice day!

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