E Market Briefing For Wednesday, Sept. 15

Deep thinking about productivity, impeded growth paces due to COVID, or a tougher monetary policy 'while' the COVID beast is still running rampant, has a slight impact on the willingness to get involved in this stock market, for now. It is a short-run phenomenon, but as we've discussed, supply-chain concerns as well, leaves a prospect for economic stagnation, against which the Fed ought to stay defensive, even if they moderate tapering a bit.

white and black concrete building during daytime

Shanghai Apartment Block - Unsplash

In light of today's inflation print, you have a negative real yield for mainstream debt, and that's tying into the distress in China (Evergrande again) showing a possible disruption that could cascade into other financial instruments. China is not the end of it, their funds are contributing to the low Treasury yields and if they have to liquidate, not politically but of necessity, it hits our markets. The 'tax proposals' are also weighing on the market as we discussed last week, as a lot of long-term holders in the mega-caps are realizing gains this year, with the obviously more-favorable Capital Gains taxes, if Biden's plan is approved.

That's a possibility that is facilitated by COVID's suppression of manufacturing, again proof that the pandemic did create consumption disintermediation, and now it simply makes many products more expensive or not even obtainable.

In that regard, with semiconductor ships about 20% higher, it's fairly clear that Apple (AAPL) did not think their newest iPhone would draw the usual demand without some teasing, since 13 is essentially a minor upgrade over iPhone 12 unless of course you're a professional cinematographer. It's likely one reason Apple seems to be offering a higher-than-usual trade-in allowance for this newest one because lots of people that do trade every year don't like the catch 'carriers' do tend to impose, which is a couple years without an early pay-off option (of course there are exceptions to that).

The consensus is relaxed about inflation, insufficiently outraged about COVID, and not demanding politicians 'fund' research / development of treatments or drugs to combat COVID, with the type of zeal seen for the original (and not so great) vaccines. The name 'Warp Speed' probably inhibited some people from getting it, because it implied rapid relatively minimal (and statistically skewed by the way) testing. But let's assume it was fine for what it did, not so great for what it needs to do now, which is protect against new variants.

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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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William K. 11 hours ago Member's comment

Indeed the future is uncertain, and that also applies to stocks and the whole financial realm. The next two variations ofthis virus will be far nastier than what we have seen so far, as the ruling generals of the Chinese army try out the next versions of the death weapon. The official  government would have none of it, but the generals did it anyway.

Of course the evidence for this is purely circumstancial, it would not stand in a USA court, BUT.....