Morning Note: The Uncertainty Spawned by the (perceived) End of Uncertainty

U.S. retail sales were released this morning and, as you might expect, folks are now spending less on stuff and more on stuffing their faces, in public places that is…

I.e.,  while stuff like clothes, sporting goods, building materials, all things department stores, and even online sales all declined month-over-month, bars and restaurant sales rose 3%, after being up 13.5% the month prior.

You gotta wonder, after folks satisfy their pent-up demand for someone else’s cooking, what’s the retail landscape going to look like when they get back to those shiny new kitchen utensils (record sales of such occurred during lockdown) they actually learned how to use whilst their favorite restaurants were shuttered. 

I mean, are stuff sales really going to then rebound to offset what will be a letdown in, for example, eatery sales once those appetites are satisfied? That’s something we think about a lot these days!

We could dig further into the inflation narrative (see this week’s main message) after yesterday’s above-expectations Producer Price Index print, but since today is macro day around here (which includes an assessment of the latest inflation data), I’ll get to those tasks and circle back a bit later with our weekly update.


Asian equities rebounded from a rough few days, with 9 of the Asian markets we track (3 of the 16 were shuttered) closing higher.

Europe’s in rally mode this morning, with all but one (Poland) of the 19 bourses we follow in the green this morning.

U.S. major averages are up nicely this morning, although they’ve a ways to go to get themselves into the green for the week: Dow up 258 points (0.75%), SP500 up 1.04%, SP500 Equal Weight up 1.06%, Nasdaq 100 up 1.45%, Nasdaq Comp up 1.57%, Russell 2000 up 1.52%. 

The VIX (SP500 implied volatility) is down 14.44%. VXN (Nasdaq 100 i.v.) is down 12.20%.

Oil futures are up 1.71%, gold’s up 0.65%. silver’s up 0.91%, copper futures are down 0.10% and the ag complex is down 0.22%.

The 10-year treasury is up (yield down) and the dollar is down a not-small 0.49%.

Led by solar stocks, MP (rare earth miner), oil services stocks, uranium miners and ALB (lithium miner) — and dragged only by ag futures — our core mix is up 0.82% to start the day.


While Victor Frankl was referring to something far more important than markets in the following from one of history’s most moving works, Man’s Search for Meaning, I believe we can apply it to a financial market environment that has lulled many participants into a sense of certainty (end of uncertainty), based on the notion that the Fed has it all under strict surveillance. An ill-conceived sense of certainty, I fear:

“With the end of uncertainty there came the uncertainty of the end.”


Have a great day!
Marty



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