When I was a kid I would make up book reports because I absolutely hated to read. I made up the title, plot, story line, characters, you name it. Hardy Boys mysteries were usually the easiest.
I got busted finally because a fellow student asked the librarian to find my book. He wanted to read it. She couldn’t find it period and a little further investigation ensued.
My teacher gave me a C and said she wasn’t going to call my parents because she was impressed with my creativity and just warned me to never do it again. Perhaps I was a little too creative?
Today the exact opposite holds true. I read every chance I get and always have at least one sometimes two books going. Visit my Off Duty Pursuits for recent (quality) titles. I promise they are real.
I relentlessly seek Perspective.
JFK would routinely fill an entire room with as many differing opinions and viewpoints as it would hold, simply for perspective. The decisions were normally made outside on the patio after RFK provided a final take.
Opinions are many, decisions are one. You have to own it.
I can normally sense when the market or the economy is at a turning point because my appetite for perspective goes through the roof. My mind realizes it needs more wood for the fire and in search of it I go.
I am getting that exact sense as we approach what is typically one of the lowest volume trading weeks of the year. So, I will likely be turning away from my trading desk and facing forward, thinking forward.
Two podcast recommendations very quickly before I move on, from two of my favorite sources.
The Compound hosted value investor and hedge fund manager Guy Spier and it was the only episode I recall that had no visuals or charts. Sometimes you just listen. This was one of those.
RiskReversal’s On The Tape podcast hosted Tony Dwyer from Canaccord Genuity Group where they discussed the current state of the markets and the economy. They outline some key risks currently present and also what lies ahead in terms of opportunity.
Both of these episodes are well worth the time. Perspective.
Tony made a comment on the Pod that stuck with me when he said the street was now “made for TV”, meaning all the analysts were “obligated” for predictions and held accountable for every call, right or wrong. So true.
That is exactly why I love these Podcasts. I can get quality content from the brightest minds on the street at my convenience without the incessantly talking head clown show on CNBC. I appreciate, prefer and stream Bloomberg daily but even they too get the mute treatment more often than not.
Two items were on everyone’s mind this past week, Nvidia earnings and the Fed meeting at Jackson Hole.
NVDA blew the doors off earnings still firmly frontrunning the AI frenzy. The stock went north of $500 after hours but that move was quickly faded Thursday and gave it all back. Consider this lack of follow through a shot across the bow for markets. They are tired. Morgan Stanley’s Mike Wilson would agree.
Checking in on SPY, even with the downward pressure we continue to hold the upward channel and the RSI has stabilized:
Same SPY chart with some subtle additions of my own: projected trading range, a revised channel, support line at 438 and the unfilled gap at 423.95:
I would expect some sideways movement dancing around that 438 level given the reduced activity ahead but that lower channel band and unfilled gap looks like a magnet to me. Just one man’s opinion.
So what did we learn from Jackson Hole?
I would say a whole lotta nothing new. Definitely not the same hellfire speech as last year, definitely not mission accomplished either. My takeaway was simply that now…We Wait. Wait for the September 13th CPI print, more PPI and unemployment data, etc. Wait for the onslaught of hikes to weave their way through each level of the economy.
We now drift slowly into the void. And we wait.
on balance
The market has been riding the high of the soft landing scenario further fueled by the AI hype. Meanwhile, rates of all shapes and sizes are stalled in the stratosphere and that is exactly where they are likely to remain for some time.
I can’t imagine trying to buy a home at this point. Does anyone remember 8% on a 30 year? If not get ready, it’s coming. I don’t care how much new construction comes on line, at some point the inflated prices and 8% mortgages will deep freeze even the highest of FICO borrowers. Eventually the math simply does not work.
I also can’t imagine trying to buy a car north of 10% or carrying credit card debt north of 20%.
Higher for longer is not something most remember. The mechanics behind the curtain, the gears all start to turn a little slower in this type of backdrop and I am not convinced we: a) have seen the true impact yet and b) have fully priced in the tail risk from any unforeseen larger scale fallout.
The voice in my head keeps telling me to be nimble. My stops are much tighter, my positions smaller. When in doubt said voice also reminds me that zero risk 5% money market fund looks pretty good.
The voice also reminds me to read and listen as if my life depended on it. You want 20 seats at the table and you want to hear from all 20. You want to listen with intent.
Then you calmly walk out on the patio and make a decision.
The Finance Stance 