“Our job is to find a few intelligent things to do, not to keep up with every damn thing in the world.”

~ Charlie Munger

 

Good Morning,

I will keep this short so as not to interrupt the summer vacation fun.

If you feel like you are walking through a fog as it relates to markets and the coverage of same – welcome to the August.  Often the slowest month of the year, it often blends into September in a way where it feels like it lasts about 6 weeks instead of 4…just to rub it in.  The haziness, combined with the dreadful lack of really important stuff makes it easy to get frustrated.

But let’s take it all in as the positive upside energy builds under the surface.

Ghosts on The Pathway

Judging by the latest readings of various sentiment indicators – and adding a little weight to the “rainy decade fund” of $19 Trillion held safely away from this ugly old stock market by consumers – you get the clear picture.  Most in the audience just don’t like market making new highs

 

No matter which way you slice this fear data – “overly bullish” is not a conclusion you will find anywhere in the haze.  It is still shocking to me.  Does it mean no red ink days?  Heck no.  August is plagued with air pockets and swoons.  A mix of no volume, jittery crowds, high media tensions and a ton of Q2 earnings releases gets you more noise than we should allow in.

Hence the nature of August – lots of ghosts.

Earnings – Up – Way Up

I am pretty sure “surprise” will be the most typed word this earnings season.  Based on how things are unfolding – it may be the same for Q3!

But here is something kind of interesting.  For months, and for reasons I do not at all get – the semiconductor region of the market has been flat.  Stuck in a trade range that has been underway for most of the year – even as we have been running full-tilt to keep up with demand.  Most tech companies are crushing expectations and many more are raising guidance.

The good news?  In recent days – as the chart shows below – that trade range has been broken…to the upside.

Once this clears the summer haze, don’t stand in front of the capital that is likely to move

 

And fitting well with the “don’t even mention stocks to me” psyche permeating the crowd, demand for 10-year government bonds – priced at levels which will assuredly lose money for a decade – remains strong as rates dip below 1.15%.

How low?  Good question, but at a P/E of 85+, those scary stocks look a lot better to me as the future horizon expands ahead for the long-term investor

 

Patience my friends – patience.   It is August – and all August’s are like this.  Pray for some chop and angst.  Give me a a week or two of it – and you will see that Fear gauge above drop into the teens again – or lower.

Now that would be a perfect set up for the race to the finish for 2021.

Enjoy your summer with family and friends.

Until we see you again, may your journey be grand

and your legacy significant.