Morning Briefing
December 8, 2021 | CHPT, Daily JAM, Morning Briefing, NKTR, Short Term |
With the VIX “fear index” falling back closer to “normal” levels–it dropped to 21.89 yesterday from 31.12 on December 1–it sure feels like the extreme volatility of the end of November and early December is on the ebb. The move to yesterday’s 21.89 close from December 1 was was a surge of 30% in the CBOE S&P 500 Volatility Index in a week. This move away from panic follows on a jump in the “fear index” in the week from November 24 to December 1 of 67% in the opposite direction. I’d be surprised if we don’t see another surge in volatility in the rest of December or in January with what promises to be a crazy earnings season, but even if volatility holds at something like today’s level–slightly elevated from the historical averages but in the rough ballpark–don’t forget that volatility has a long tail. Volatility, in fact, creates volatility. And not least of all in individual stocks.
December 7, 2021 | AAPL, AMAT, ASML, Daily JAM, Morning Briefing, NVDA, NXPI |
Here we go again. It’s not that we really have any more information about the Omicron Variant–we certainly don’t know what its effects will be on global economic acuity–but just as fears that the Covid-19 variant would send the world back into lockdown crushed stocks last week, this morning, December 7, a belief that Omicron won’t be all that bad has taken root and stocks are soaring in morning action.
December 6, 2021 | Daily JAM, Morning Briefing |
It’s the People’s Bank to the rescue. Today, December 7, China’s central bank announced that it would reduce the reserve requirement for most banks in China by 0.5 percentage points on December 15. The move has the effect of releasing 1.2 trillion yuan, about $188 billion dollars, in liquidity into China’s economy.
December 3, 2021 | Daily JAM, Morning Briefing |
On the one hand, the headline numbers in this morning’s jobs report were disappointingly weak. The U.S. economy added just 210,000 workers in November. That was less than half of the median estimate–550,000–in Bloomberg’s survey of economists. So the worry is that the U.S. economy is growing more slowly than expected. Weak growth is generally bad for stocks. But it might have helped the bond market because a weaker U.S. economy might delay plans for the Federal Reserve to raise interest rates.
But on the other, if you looked into the numbers, they seemed just downright odd. And didn’t provide much hope that the Fed would see this data as a reason to hold off on raising interest rates.
December 2, 2021 | AAPL, AMAT, Daily JAM, Morning Briefing, SMNNY |
Want to know exactly how volatile the stock market is right now? Yesterday investors and traders got news that the first case of the Omicron Variant had been recorded in California. On that, and some “We’ll tighten sooner than expected” remarks from Fed officials, stocks plunged with the Dow Jones Industrial Average showing a 972 point swing from high at 11:25 and 34,994 to the close a 34,022. Today investors and traders got news of a second case–a Minnesota man who had attended an anime conference in New York. And the stock market didn’t just shrug; it rallied big time with the Standard & Poor’s 500 closing up 1.42%, the Dow Industrials u 1.85%, and the small cap Russell 2000 ahead 2.74%.
December 1, 2021 | Daily JAM, Morning Briefing |
Congress may simply be out of time as it stares at a Friday deadline for keeping the federal government open. Republicans in the House and Senate seem determined to throw enough sand in the wheels to prevent a vote on funding the government after midnight on Friday.
November 30, 2021 | Daily JAM, Morning Briefing |
Right now the stock and bond markets can’t decide if the Omicron Variant will crush the global economy badly enough to lead the Federal Reserve to delay its timetable for raising interest rates or if the U.S. economy is so strong and inflation so persistent that Jerome Powell and company will be pushed to accelerate the Fed’s tightening. Which makes Friday’s jobs report for November even more important than usual since it might provide the tipping data to send the Fed’s decision one way or the other. Right now economists at Argus forecast that the economy added 550,000 new jobs in November. That would be an increase from the 531,000 jobs created in October and from the 32,000 created in August.
November 30, 2021 | Daily JAM, Morning Briefing |
Federal Reserve Chair Jerome Powell retired the word “transitory” to describe stubbornly high inflation in testimony today in front of the Senate Banking Committee. And, Powell continued, the Fed might accelerate the pace at which it is winding down its purchase of Treasuries and mortgage-backed assets. “It is appropriate, I think, for us to discuss at our next meeting, which is in a couple of weeks, whether it will be appropriate to wrap up our purchases a few months earlier.” The Fed is currently scheduled to complete its asset-purchase program in mid-2022
November 29, 2021 | Daily JAM, Morning Briefing |
On Friday, December 3, the Bureau of Labor Statistics will release the jobs numbers and unemployment rate for November. And the report is expected to be positive and to continue the strong results from the October report when the economy added 531,000 jobs and the official unemployment rate dropped to 4.6%. But there’s a problem with this report–and with just about all economic news right now.
November 22, 2021 | Daily JAM, Morning Briefing |
This morning President Joe Biden announced that he will renominate Jerome Powell to another four-year term as chairman of the Federal Reserve. Wall Street sounds like it’s generally happy with the move–continuity is usually seen as good by the financial markets–although bond yields are up as of 2:30 p.m. this afternoon with the 10-year Treasury yield climbing to 1.62%, a gain of 7 basis points. That’s a reflection, in my opinion, of a little bond market disappointment that Biden didn’t nominate Lael Brainard to replace Powell, She was seen as more likely to hold interest rates lower for longer than Powell. Powell’s nomination faces opposition from progressive Democrats who don’t like the financial deregulation that has continued during his term or who don’t think the U.S. central has done enough on global warming. Powell also faces opposition from conservative Republicans because they believe the Fed should be moving faster to stomp on inflation. My view is a little different than either Democratic or Republican objections. I think that if Biden had been more confident of the economy recovery he would have nominated Brainard. That would have put a Biden stamp on the U.S. central bank.
November 19, 2021 | Daily JAM, Morning Briefing |
On November 15 in my post on what’s priced in and what’s not, I noted that an upsurge in Covid infections this winter wasn’t priced in. And that evidence of a new wave from Europe where infection rates have headed higher in what might be a preview for the winter in the United States could send stock prices lower. Well, yes indeedy. That exactly what happened today after the Austrian government announced a full lockdown starting on Monday, in response to surging cases of COVID-19. The lockdown will include both those vaccinated and unvaccinated, it will last for 10 days minimum, but could be extended for 10 days further. The fear is that Germany, which is battling its own higher rates of infection, is next.
November 18, 2021 | Daily JAM, Morning Briefing |
In my YouTube video posted today I dismissed (pretty much) my worry that this rally was getting narrower and therefore closer to a nasty end. Nvidia (NVDA), up 8.85% at the close ) I noted had dragged a few chip stocks with it after the company reported a significant earnings beat and increase in guidance yesterday. For the day Qualcomm (QCOM) was up 1.63% and Advanced Micro Devices (AMD) ahead 1.86%. But stocks as a whole didn’t join in and some recent bellwether stocks actually retreated with Coca-Cola (KO) off 0.96%, Chipotle Mexican Grill (CMG) down 1.87%, and Disney (DIS) lower by 1.11%. Not good. What you’d like to see as more stocks join in–the rally gets broader–as prices go up if you’re looking for evidence that a rally might continue for a while. But, I noted in my video, not all is lost. Big tech stocks, which have largely been left on the sidelines in the rally, were up strongly today wit Amazon (AMZN) gaining 3.78% and Apple (AAPL) higher by 3.05%. If this group starts to participate the rally would be likely to have another leg. However, that’s not my only worry about this rally. I’m seeing evidence that the gains being racked up by stocks such as Nvidia, Qualcomm, and Apple are based on increasing vague speculation about trends that are way, way off in the future.
