Market Briefing For Thursday, Dec. 8
Souring sentiment has become the dominant narrative, a year or more 'after' the historic insider selling after the buybacks artificially lifted the S&P.
Compression of yields is also part of what's going on; with some contending a declining profile of Yields is 'also' negative (as signaling a faltering economy). Yes, sometimes the same analysts who wanted to see signs of a slowing for a more benign approach forthcoming from the Fed.
Can they have it both ways? Perhaps. Much of the recent buying 'and' selling just happened to be rather formulaic; so I thought this might have been more or less 'structured' buying and then selling; rather than anything analytical but simply technical.
It does fit-in with our general idea of a defensive first half of December, with a hope (not certainty) of better market behavior in the final days of this year. So we'll see about that; but suspected nothing definitive with more apprehension ahead of next week's FOMC meeting. However, there could be reaction then relief, that it's over.
I think a lot of what we saw Tuesday was related to breaking below a channel trendline, as I observed on the charts last night. So we got another try today.
In-sum:
We got another revival try today; finishing more or less neutral. Today I'm abbreviating my typing more than usual not just because nothing changed (several influences and nuances have as I denote in the videos), but as for an unknown reason my vision became blurry after vising the dentist. (Perhaps I'll get a toothache if I see an eye doctor...).
Anyway, stocks fluctuate and that for sure was the general expectation for this week. Thursday should see more jockeying around....also all pre-FOMC.
There's another aspect of how the market accelerates down (especially some funds) rapidly and beyond technical points being violated. Might relate to Asia and the collapse of wealth related as much to 'property' as to other investment assets. Blackstone just experienced a sort-of redemption run; and faced that today. They apparently have heavy investments in (Chinese?) real estate; not something we've focused on.
However regardless of the rationale or 'a' panic on the part of Asian investors; the pressure is there and even domestic U.S. investors might find themselves tethered to the same 'fund' that Asian investors might be getting out of. What's tricky is until CEO Schwarzman commented today, nobody real knew sources of the selling; and even now he doesn't acknowledge real estate, but calls the redemptions 'baffling'. Maybe they're not so 'baffling'; but confronting what the motive for selling is might be useful; especially for American investors (we've not assessed Blackstone (BX) or it's potential broader impact on other entities).
In the past I have been critical of lumping dissimilar stocks into a fund, an ETF or how big-cap stocks can influence an Index to give an overly bullish or even bearish tone, that isn't representative of most other stocks in the same 'pool'.
Of course Apple (AAPL) is the best example; it's the largest influence in the S&P; but I am not focused on Apple or even the SOX, where even an 'active investor' is challenged at times, because a domestic semiconductor may still be dragged down (or up) based on perceptions of how the bigger-cap semi's are doing. At this point I continue a defensive tone on Apple; not because it likely drops a lot but there's 'time' this year, and everyone frets about demand; beyond supply issues from iPhone City in China.
(As those ideally will be resolved, however that has little to do with domestic demand; which should contract the closer we get to the next-generation; the iPhone 15 launch next September. It's not just about Apple kicking production to India (which definitely can't do all that much; and AirPods etc. are Vietnam largely now), but 'demand from Chinese customers' who were locked-up...and I think that's the demand concern rather than a dearth of U.S. iPhone interest.
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Speaking of semiconductors, after yesterday's drubbing, there was a rebound of some importance technically; and stocks like AEHR and SKYT showed life in a responsive way. In the case of AEHR, there was news however that sure helped: they announced a new major 'global' FOX XP (that's silicon carbide's primary testing system) client. The reference was to unit installation at client's primary location with plans to expand on a 'worldwide basis'. While they didn't announce the client's name, I can speculate a bit (it doesn't really matter, because all the major semi's that are going to SiC -Silicon Carbide- wafer emphasis are likely looking at AEHR. It's hard to say 'who' the new client is (an existing customer moving to SiC as well as said to be enthusiastic), but I'll venture feasible guesses in this order: ST Micro, Infineon, Wolfspeed, Texas Instruments.... and even TSMC. It's not ON, because we believe they are the lead customer; and the CEO refers to a 'new' Silicon Carbide customer. ON is no longer the 'new' SiC customer but is ongoing with residual income if we're right. |
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Bottom-line:Market fluctuates and probably remains indecisive for now. I've typed more than intended, and can barely focus. But I have an eye out for any new developments that are actually meaningful; beyond debating the Fed for which we continue to suspect a 50 basis point hike likely next week. |
More By This Author:
Market Briefing For Wednesday, Dec. 7
Market Briefing For Tuesday, Dec. 6
Market Briefing For Monday, Dec. 5
This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can subscribe for more
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