Morning Note: Beware the Investing Einstein

While (per yesterday’s noteChina attempts to clamp down on metals prices, it appears ready to support its notably underperforming (ytd) equity markets. China’s CSI 300 Index was up 3.2% overnight. 

Other noteworthy news this morning comes from abroad as well: Japan’s Machine Tool Orders (considered a key indicator of global growth) showed a huge surge in activity in China (no wonder they’d like to rein in metals prices). Last month saw China’s second-highest ever intake; capturing almost half of total orders. 

Germany’s just-released IFO sentiment gauge says German’s economic expectations are the highest they’ve been since 2011.

As I’ve illustrated herein, non-US equities have not remotely seen the runup U.S. stocks have over the past decade+. Hence, they sport notably more attractive valuations and higher dividends. Which, among other macro developments, explains why our current core portfolio tilts slightly in favor of non-US over US equities.


Asian equities rallied overnight, with all but 2 of the 16 markets we track closing higher.

Europe’s mostly green this morning as well, with 15 of the 19 bourses we follow currently trading up.

U.S. major averages are essentially flat: Dow up 26 points (0.08%), SP500 up 0.07%, SP500 Equal Weight up 0.04%, Nasdaq 100 up 0.18%, Nasdaq Comp up 0.21%, Russell 2000 up 0.11%.

The VIX (SP500 implied volatility) is up 0.82%. VXN (Nasdaq 100 i.v.) is up 3.03%.

Oil futures are down 0.33%, gold’s up 0.65%, silver’s up 0.91%, copper futures are up 0.05% and the ag complex is up 0.27%.

The 10-year treasury is up (yield down) and the dollar is down 0.16%.

Led by emerging market equities, gold, silver, industrial stocks and bank stocks — but dragged by utility stocks, energy stocks, AT&T, energy stocks and uranium miners — our core portfolio is up 0.14% to start the day.


While, as I suspect you’ve gathered, we go to great lengths in the development and everyday assessment of the theses that drive our investment decisions, we know full well that, per Popper, while certainty would be a wonderful attainment, there’s of course no such thing:

We can assert the truth, attain the truth, often enough. But we can never attain certainty. For we know – in the sense of conjectural knowledge – that there are people with a delusion that they are Einstein or a reincarnation of Goethe.          — Karl Popper

I.e., beware the investing Einstein…


Have a great day!
Marty

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