Morning Note: It (the setup) Is Way Different This Time!

I’ll cut quickly to the chase this morning after a few quotes from my own morning reads (although don’t skip this one, the book quote at the bottom’s a good one). A more substantial weekly message will follow later today.

Per Bespoke’s morning note, overnight data were mixed (but leaning negative):

“Korean business surveys reported inventories starting to normalize and slower services demand, while Chinese orders for Japanese machine tools rose modestly but remained in a drawdown as that economy slowed. In Germany, IFO expectations fell below the current assessment, a potential signal for an economic rollover. Mexican activity weakened across all sectors in June per monthly data released today, while Brazilian inflation continued to surge. US mortgage activity continued to point to decelerating housing volumes despite a surprise uptick this month.”

While there’s green shoots of good news around covid: 

“China has reportedly started to re-open its Ningbo port after a two-week shutdown, Japan is set to spend an additional 1.4 trillion yen on additional COVID vaccines with two-thirds of the directed towards the purchase of boosters, while JNJ announced that an early study shows a boost in the body’s immune response to a booster of its COVID vaccine.”

And, per economist Dave Rosenberg, a bit of headway’s been made on infrastructure, more optimism over vaccines and the feel that Powell will use the delta variant to delay any potential market-rattling announcements later this week (I dunno): 

“In the U.S., apparent progress on the infrastructure file in the House and the step-up we are now seeing in vaccination rates have added to the recent market euphoria, coupled with expectations that Jay Powell will not signal any “taper” at the Jackson Hole symposium.”

Asian equities were mostly green overnight, with all but 3 of the markets we track closing higher.

Europe’s leaning red so far this morning, with 10 of the 19 bourses we follow trading lower as I type.

U.S. stocks are essentially flat to start the day: Dow down 8 points, SP500 up 0.09%, SP500 equal weight up 0.17%, Nasdaq 100 up 0.14%, Nasdaq Comp up 0.14%, Russell 2000 up 0.22%.

The VIX sits at 16.93, down 1.74%.

Oil futures are down 0.24%, gold’s down 1.13%, silver’s down 0.42%, copper futures are up 0.50% and the ag complex is flat.

The 10-year treasury is down (yield up) and the dollar is up 0.08%.

Led by ALB (lithium miner), financial stocks, AMD (chip maker), uranium miners and MP (rare earth miner) — but dragged by gold miners, KRBN (carbon credits), gold, silver and Latin American stocks — our core portfolio is off 0.05% to start the session.


The following quote for Leon Levy’s indispensable book The Mind of Wall Street has me thinking about the notably different allocation mix of our core portfolio versus its makeup from the market low in 2009 through the end of 2019. Having lived intimately with markets since the summer of 1984, and having studied their dynamics throughout history — while of course ultimate outcomes remain to be seen — suffice to say that my observation is that conditions today are vastly different than the conditions that had us all in equities during that longest bull market on record.

“Those most adept at profiting from a particular market are often least likely to notice when the game is over, and probably the least psychologically prepared to profit from the successor market.”


Have a great day!
Marty

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