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Weekly Update

Weekly Update 30-Nov-2022

  • So much for the market acting rationally

  • Shopping update is mixed

  • China Authoritarianism is now bullish?

  • We think the Earnings trajectory is obvious

  • Positioning is all about rotation

  • European positioning – now that is a short squeeze

  • Housing data is not improving

  • Employment is starting to sour (maybe)

  • Oil is being whipped around by Policy

  • Crypto…where did all the money go?

  • Quick Hits

  • Chart Crime of the week

  • Trading Update

  • Tesla Files

Just last week, we wrote that the market was starting to make some sense.  Old economy stocks, dare we call them profitable companies, continued to outperform the Fantasies and Frauds (aka Profitless Tech).  The Fed pivot narrative was only really helping stocks with positive cash flows other than the random bout of short-covering.  On top of this, the market was starting to trade sideways.  Narrative-driven bounces were less emotional and thus less impactful.  Looking at today’s reaction to Fed chairman Powell’s speech, we might have jumped the gun on calling this market rational.  Powell reiterated the consensus view of the Fed:  Rate hikes would be smaller going forward, but a more restrictive policy is needed and only time will tell when the balancing point is reached.  Higher rates for longer.  But some pundits oddly interpreted this as a pivot.  Glenn Hutchins, a successful private equity investor who sponsored the Powell speech, said with a straight face that the intended message was that the December hike was going to be the last hike.  He thinks Powell’s use of the phrase “softish landing” was a nod towards optimism (we think “softish” sounds more like a recession than “soft”).  And somehow the Fed was going to “feel” its way to and through the proper path of monetary policy rather than relying on “analytical models” (aka data).  We normally would not focus so much on one pundit, but we suspect his comments embody the warped mentality of hearing things that were not said.  Put another way, the market is twisting itself into thinking the refutation of the null hypothesis, that the Fed will over-hike in the short-term, is the same as the Fed doing the pivot.  Chalk Creek will wait for the data.  The intersection of Growth and Inflation will be our marker buoy.  And oh yeah, another crypto exchange declared bankruptcy.  As much as this is laughable, what is happening in crypto is a real destruction of wealth.

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