Markets as good as gold (and silver)

The Credit Writedowns newsletter is good, but I am just too stingy to pay to see behind the paywall. This article is a rare one that can be seen by everyone. It’s not amazing, but it’s pretty clear about predicting a really bad jobs number this week. The only issue is how the (equity) market takes this.

As far as today’s markets are concerned, precious metals are up, the yield curve seems to be flattening, other commodities are not doing very much and FX is fairly subdued, although the dollar continues to trend down. It seems odd to see commodities (well, money-like commodities) so strong against flat equity and bond markets. Dr Copper is not giving a clear prognosis, but he certainly doesn’t see the economy returning to robust health for some considerable time, even with China putting the pedal to the metal in infrastructure spending.

My mood today is that the sheer scale of money creation will end up forcing equity markets higher, in spite of their insane over-valuation. However, I can barely convince myself. The famous Robinhood traders (or bagholders as they would probably be referred to in the dealing rooms of the City) may just keep the markets trending higher for a few more weeks but it’s hard to see them higher still in a year’s time.

The dollar’s weakness is not a certainty. Well, that’s an information-free sentence, but what I mean is that as this article points out, with pessimism about the dollar hitting all-time highs, we might be due for a dollar rally. This would then be good for Amazon and co. I

An interesting view, put forward by Grant Williams, is that the reason that the FAANG+ has done so well is not that their fortunes have much to do with technology, but that they are all still largely under the control of their founders and the float of their shares in issue is very low. The combination of being in an index (NQ), and having a low float (or just being a hot stock and …) is explosive. This is certainly consistent with poor performance from “old” tech companies, like IBM, which presumably have a high float. The interesting thing is that really stocks like $INTC and $TMC are relatively cheap, at least compared to $FB, which is really just an advertising company. I’d be interested in knowing how to screen stocks for high insider ownership.

Wrap

The day finished much as it started, except there was a huge ramp towards the end for Robinhood type stocks. $TSLA jumped 9%. You can see the list here courtesy of Zerohedge. I keep my own list of these kind of stocks. At some point they are going down a lot, but for the moment I am just holding onto my capital and battening down the hatches. In a story I can’t find to link to, I read that insider sells are at a high.