September 7, 2021
Good morning,
Apologies for my radio silence last week, and the skipped note Friday with no explanation. Playing Hooky? – I wish. I woke up Thursday morning to a stiff fever and what felt like a king-flu concentrated all in my skull. Due to the intensity – chills like you read about, head you can’t read with – I thought Covid. We closed the office, and I spent the next four hours curled up in a corner making dolphin noises. 8am – off to a testing site for 2 tests – rapid, and PCR just to be sure.
Four more hours – rapid results negative – tentatively relieved. 24hrs later PCR – negative, completely relieved. It would appear to me that I have a unique flu this flu season – nothing below the neck. Symptoms have faded considerably, thank goodness. However, there are echo cycles it would seem – a comparatively mild headache, Advil, body sweats, all better – once or twice each day of late. It’s day six, I’m working from home out of an abundance of caution for our office environment and funny enough have my annual physical scheduled for tomorrow morning anyway. But I am curious – anyone else hear any something like this going around?
Equity markets are quiet as they transition from overnight sessions into the U.S. cash market open this morning. It seems that everyone really enjoyed their Labor Day weekend. The Bond market is active however. Yields are up to 1.36% on the U.S.-10yr now, call that 10 bps above their average yield all summer. Are bonds finally seeing lasting inflation? Perhaps, but there is an avalanche of supply (new issuance) this week for Treasuries – particularly the long end of the curve. Bonds could just be pricing that in this morning. Let’s wait a week before calling the summer rally in bonds over.
Both the Tape and the Fed remain bullish from a signal perspective and so we remain fully invested. The list of negatives associated with valuation and momentum is slowly growing as it usually does throughout a bull market cycle. Labor Day is behind us and the fall market season leading into year end has officially begun. We remain a fully invested bear paying close attention to the Tape – any change there would be the signal for a change in our investment posture as well. See you Wednesday.
Be well,
Mike