Morning Comment: The spill-over of a key de-risking policy.


Much like the coronavirus in January and February of 2020, the situation facing Evergrande has been staring investors in the face for a while now…and yet they have ignored the growing negative situation (mostly due to the fact that the vast majority of Wall Street told them it was nothing to worry about). The problem with issues like these is that they don’t matter…until they do.

The HUGE decline in Evergrande’s stock and bonds that we have been focusing on for many weeks has now spread to other real estate giants in China. (One smaller developer…Sinic Holdings…had its trading halted after it fell 87%!) It is also weighing on insurance stocks and bank stocks in that part of the world, so investors are now finally starting to worry about a contagion. Of course, “contagions” are not all the same. However, the one component of the of the Evergrande disaster that has unfolded over many months that we’ve been focused on is finally come to a head: Investors have finally become worried about liquidity issues. In other words, there seems to be a spread of margin calls and “forced selling.”

It’s amazing to us that people could think that the leader of the world’s second largest economy could embark on a major de-risking/de-leveraging program…without it spilling over into other markets around the globe. Back at the beginning of 2020 (in January & early February), we kept telling investors that the consensus on Wall Street was wrong…and that the pandemic would become a major problem. Therefore, we said, investors should raise some cash and add some hedges…..Recently, we have been the exact same thing. We have simply believed that the overbought, overvalued and over-leveraged U.S. stock market could not avoid being impacted by the de-risking of such an important economy as ...

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THE WEEKLY TOP 10

I’ll be away next weekend, so I will send-out an abbreviated edition of “The Weekly Top 10” on Thursday evening. Thank you very much.


THE WEEKLY TOP 10


Table of Contents:

1) When inflation is induced by a lack of ...

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Morning Comment: Liquidity stresses in China growing


Last year, at about this time, we turned bullish on the bank stocks. We said that after 2.5 years of underperformance, the group would finally start to outperform the market. There were not very many people who agreed with us. ...

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Morning Comment: Oil & gas stock poised to breakout again?



After falling for five straight days, the S&P 500 looks higher by about a half a percentage point this morning. There does not seem to be a key reason why the market is bouncing back this morning…other than the fact ...

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THE WEEKLY TOP 10

We just want to make a quick comment because we have some new readers. Each point begins with a very quick summery (in bold letters) of what we’ll say in the “body” of that bullet point. We still like to ...

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Morning Comment.......Never forget.

Tomorrow will be the 20th anniversary of 9/11, so it’s tough to talk about the markets on a day like this. With this in mind, we’ll just highlight a few bullet points…and leave the rest of the market analysis to ...

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Morning Comment: Imminent change in trend for the bond market?



Well, here we are, it’s September. Sure, it technically began last Wednesday, but now that Labor Day weekend is behind us, the seasonally September/October timeframe has officially begun. Of course, the fact that everybody is talking about this seasonally tough ...

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Morning Comment: ECB warning....China warning....Mega-cap tech extended.



The stock market rallied for the seventh time in eight days yesterday, but Monday’s move was a very narrow one, and it came on very low volume. Despite the 20-point rally in the S&P 500, the breadth for that index ...

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Morning Comment: Long-term yields creeping higher.....GOOGL getting very overbought


As we move closer to this week’s KC Fed Symposium in Jackson Hole, the yield on the U.S 10-year note has crept a bit higher…and it is now back above 1.3%. This is not a major development. In fact, the ...

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THE WEEKLY TOP 10


THE WEEKLY TOP 10


Table of Contents:

1) Don’t blame the Fed if that stock market corrects at some point this year.

2) “Supply constraint” inflation is much different (and much worse) than “demand led” inflation.

3) Economic data could ...

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Morning Comment: Stagflation is the real concern, so stop blaming the Fed.



We got a relative sharp decline in the stock market yesterday on very poor breadth (8 to 1 negative on the S&P 500), but volume was not very strong (just 2.4bn shares on the composite volume). However, the market closed ...

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THE WEEKLY TOP 10



THE WEEKLY TOP 10


Table of Contents:

1) The argument that ultra-low rates justify higher stock prices is quite flawed in today’s world.

2) The stock market IS expensive. Don’t let anybody tell you otherwise.

2a) The odds that the ...

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