Morning Note: Impatience Can Be Costly

I wouldn’t expect much action (or much trading volume, let’s say) in markets leading into this Wednesday’s Fed announcement and press conference. 

This morning’s modest move lower in large cap equities suggests that, at least as the week gets underway, there’s a little jitteriness around the prospects that the committee might hint that they’re maybe talking about when they might drain a bit of the punchbowl.

Clearly, gold traders are feeling the butterflies a bit more than equity traders at the moment (both get hammered if the Fed threatens to tighten); gold’s down 1.12% as I type.

The following headline crossed my screen early this morning: “Paul Tudor Jones says ‘go all in on the inflation trades’”

Here are the bullet points from the interview with the hedge fund legend:

  • Paul Tudor Jones told CNBC on Monday he would “go all in on the inflation trades” if the Federal Reserve is nonchalant this week regarding recent consumer price data.
  • “I’d probably buy commodities, buy crypto, buy gold,” the billionaire hedge fund manager said.
  • “If they course correct,” he continued, “then you’re going to get a taper tantrum.”

I.e., The “taper tantrum” was a term coined by ex-Fed Chair Ben Bernanke back in 2013. The mere mention at the Fed’s annual Jackson Hole meeting that the central bank was planning to provide less juice saw markets throw a bit of a fit — which turned out to be relatively minor and short-lived, by the way.


5 of the 16 Asian markets we track were closed overnight, of the 11 that were open, 8 finished in the green.

Europe’s leaning green so far this morning, with 16 of the 19 markets we follow trading higher (although in very modest fashion).

U.S. equities are mixed to start the day: Dow down 138 points (0.38%), SP500 down 0.20%, SP500 Equal Weight down 0.38%, Nasdaq 100 up 0.04%, Nasdaq Comp up 0.11%, Russell 2000 up 0.04%.

The VIX (SP500 implied volatility) is up 4.98%. VXN (Nasdaq i.v.) is up 3.76%.

Oil futures are up 1.18%, gold’s down 0.60% (coming off the earlier low), silver’s up 0.15%, copper futures are down 0.08% and the ag complex (reeling from a positive weather/yield report over the weekend) is down 2.26%.

The 10-year treasury is down (yield up) and the dollar is down 0.09%.

Led by MP (rare earth miner), wind stocks, solar stocks, emerging market equities and energy stocks — but dragged by uranium miners, ag futures, ALB (lithium miner), gold miners and materials stocks — our core mix is off 0.31% to start the session.


While I opened with the notion that we aren’t likely to see much action till mid week, know that a lack of action seldom sits well with investors/traders, even the pros. And, per Jesse Livermore below, impatience can be costly:

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals…”


Have a great day!
Marty

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