Morning Note: Words to heed, indeed…

Keeping this morning’s note quick, as today is the day we do our deep macro dive, and this week’s update will be fairly robust. We’ll get into the weeds of what’s driving our present inflation thesis.

Stocks had somewhat of a rough go of it yesterday as Washington floated the idea of raising capital gains tax rates on the highest earners. As you’ve noticed, financial markets (and, not to mention, the highest earners) hold more than a little political sway, as even some Democrats are expressing some concern. So, while, unequivocally, the current Administration’s platform demands higher taxes, I don’t suspect it’ll be all that easy to get across the finish line…


Asian equities performed overnight, with 12 of the 16 markets we track closing higher.

Europe, however, not so much so far this morning, with all but 4 of the 19 bourses we follow presently in the red.

U.S. major averages are (to varying degrees) in the green to start the session: Dow up 50 points (0.15%), SP500 up 0.45%, SP500 Equal Weight up 0.51%, Nasdaq 100 up 0.59%, Nasdaq Comp up 0.74%, Russell 2000 up 1.35%.

The VIX (SP500 implied volatility) is down 3.90%. VXN (Nasdaq i.v.) is down 2.50%.

Oil futures are up 0.55%, gold’s down 0.32%, silver’s down 0.29%, copper futures are up 1.12% and the ag complex is up 0.47%.

The 10-year treasury is down (yield up) and the dollar is down a not-small 0.33%.

Led by ALB (lithium miner), solar stocks, banks, MP (rare earth minerals miner) and metals miners — but dragged by Verizon, consumer staples stocks, gold, utilities stocks and silver — our core mix is up 0.44% to start the day.


Words to heed, indeed, by John Kenneth Galbraith. Although, per the third paragraph, alas, they all-too-often aren’t:

“Regulation and more orthodox economic knowledge are not what protect the individual and the financial institution when euphoria returns, leading on as it does to wonder at the increase in values and wealth, to the rush to participate that drives up prices, and to the eventual crash and its sullen and painful aftermath.

There is protection only in a clear perception of the characteristics common to these flights into what must conservatively be described as mass insanity. Only then is the investor warned and saved. 

There are, however, few matters on which such a warning is less welcomed. In the short run, it will be said to be an attack, motivated by either deficient understanding or uncontrolled envy, on the wonderful process of enrichment. More durably, it will be thought to demonstrate a lack of faith in the inherent wisdom of the market itself.”


Have a great day!
Marty

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