Weekend news says Korean exports for the first 20 days of August surprised to the upside, and Japan’s and Australia’s latest manufacturing PMI surveys held up fine. Their respective services PMI surveys, however, contracted notably (covid fears and restrictions). Eurozone services PMI’s held up much better (higher vaccine rates and notably fewer restrictions, if any), while manufacturing PMIs continue to denote a mix of optimism, supply constraints and inflation.

Last week, amid concerns over the Fed threatening to reduce its asset purchases and unsettling global delta variant numbers, international equities and virtually all things industrial and materials took a notable hit. This morning, however, as you’ll see below, we’re seeing the opposite.

So, are markets buoyant this morning on the prospects for vaccine uptake (Thursday, Friday and Saturday each saw 1+ million doses in the US, Sunday nearly a million), or are they simply assuming that delta will stay the Fed’s hand for now, with J. Powell delivering that message at this week’s now-virtual Jackson Hole meeting?

If it’s the latter, and Asian lockdowns and Western vaccines indeed turn the tide on delta, we’ll look for last-week-like angst hitting markets come the lead-in to the Fed’s September policy meeting.

The thing about the Fed’s asset purchases (QE) is that, frankly, at this juncture, in any direct sense, they’re utterly useless in terms of what the Fed would have us believe they deliver. That said, in a reflexive sense, sure, ever-rising stock prices make people happy. And happy people spend money… Hmm…

Asian equities rallied overnight, with only 1 of the markets we track closing lower.

Europe’s green across the board this morning, with every bourse we follow is trading up as I type.

U.S. equities are to the good this morning as well: Dow up 191 points (0.54%), SP500 up 0.57%, Nasdaq 100 up 0.66%, Nasdaq Comp up 0.79%, Russell 2000 up 1.45%. 

Oil futures are up a huge 4.43%, gold’s up 1.17%, silver’s up 2.32%, copper futures are up 2.25% and the ag complex is up 0.77%.

The 10-year treasury is down (yield up) and the dollar is down a big 0.40%.

Led by uranium miners, energy stocks, MP (rare earth miner), base metals miners and ALB (lithium miner) — but dragged by utilities and staples stocks (our only two positions in the red so far this morning) — our core portfolio is up 0.74% to start the session. 

Yes, per Marko Papic in his insightful book Geopolitical Alpha, we (to a meaningful degree) need to rethink how we think about markets going forward

“The COVID-19 crisis may have accelerated the inevitable, but America’s turn from a laissez-faire economy into a dirigiste one had begun much earlier. For investors and businesses, geopolitical analysis became more important than ever. 

Getting the market right, from here on out, is as much about the politics and geopolitics as it is about valuations, interest rates, and earnings. And yet, our epistemic community of financial professionals has no real framework with which to navigate this new paradigm.”