Market Briefing For Wednesday, Nov. 16

Salvation of the 'old order' - is what this market is somewhat about. NOT, as a slew of revisionist analysts suggest, a move into new post-global orders. I'm not advocating either as such, just recognizing one factor that changes certain assumptions both bull & bear have made, mostly involving Chinese policy.

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If indeed China realizes (something I've contended all year) how they were at least able to 'shoot themselves in the foot', not only with their Taiwan hostility, but with their repression of capitalist (o.k., commie capitalist) industry leaders, and inhibiting production with cockamamie COVID restrictions... well they made a perfect storm to defeat (pun intended sort of...de-feet) themselves and give an economic victory to the United States or other Asians, without firing a shot.

Besides Semiconductors doing better, Oil is fairly solid and should stay firm in an overall sense, especially if Chinese demand picks up. Ukraine headwinds will get addressed immediately because of the (presumed inadvertent) attack by missiles going into Poland, and maybe the back-channel talks between our Chairman of the Joint Chiefs and his Russian counterpart, will bear fruit. (Yes I know, military guys negotiating or establishing ground rules isn't unusual, but if they're negotiating instead of letting State Dept. handle it, that's a bit dif.)

There are various possibilities as to how well the Nation is moving forward or retrenching. Inflation indeed likely peaked, but that also impacts earnings from at least the big-box retailers, who a year ago had insufficient inventory going into the holiday sales time, and this year might find a need to cut prices since a quick survey suggests people are now spending more on food than 'stuff', at the same time the 'spending on experiences' probably tapered off as I did a 5 day cruise (hah, kidding, it was and is shoulder season). Carnival with today's offering is an example of action in a sector we really aren't interested in now.

In-sum: 

There's some daylight between views of Fed members and analysts as well, and that's o.k. I'm thinking the misinterpretation doesn't mean you'll not get another rate hike, but the issue is whether the 'old order' is returning, as seems to have been implied from the Xi/Biden meeting in Bali. And that's desirable, at the same time obviously the U.S. will focus on self-reliance for a few things, like Oil and importantly the newest variations of semiconductors.

A return to some form of 'normalcy' along with regular tensions, is a plus.

The market may not get fiscal or monetary help for now, that's sort of obvious. It actually is getting geopolitical help (aka China/U.S.) on economics, slightly obscured today by a quick shift of focus to Russian missiles hitting Poland (or North Korean or Iranian missiles, whomever provided them to Russia).

If history is our guide, the Fed will not be cooperative to much of an extent yet but if 'peace breaks out', they'd have an excuse to moderate their policy. So it goes back to the war, and if Russia keeps denying and obfuscating, it's still in the problematic stage. But it seems China is coming around towards almost a reversal of their support for Putin, while trying to maintain Taiwan hostility.


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