Making It Difficult
Portfolio Strategy, ETF investing, Long/Short Equity
Contributor Since 2009
David Moenning is founder and Chief Investment Officer at Heritage Capital Research, a Registered Investment Advisor. Heritage is an independent, privately owned, investment management firm located in the Denver area. Mr. Moenning has more than 33 years of portfolio management experience and focuses on a risk-managed approach to capital markets via modernized portfolio development and dynamic adaptation to ever-changing macro environments. Most recently Chief Investment Officer for a $1.3 billion RIA firm.
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Daily State of the Markets Good morning. As someone who spends a fair amount of time behind the keyboard, I often get a kick out of some of the explanations offered up by the "experts" on days like Monday. When asked about the action, some folks feel they have to create a lavish explanation. For example, instead of simply telling the reporter, "Not much to report, Bob... The dollar reversed lower, so, as has been the case lately, traders pushed stocks higher," there are those that like to make it complicated. As a case in point, let's review what LPL's Jeff Kleintop told Reuters on Monday afternoon. But first, we should preface the comments with the fact that commodities of all shapes, sizes, and colors moved up smartly on Monday as a result of, yep, you guessed it; a decline in the dollar. But instead of talking about whether or not the move is over or what moved commodities up on Monday, Kleintop opined, "Commodities pulling back is both good and bad. It's certainly good in that oil prices have pulled back a little bit as that's one of the risks facing consumers and the economy overall, but at the same time a lot of S&P corporate profits are tied to commodities and... maybe the outlook for some sectors might be negatively impacted." I'm guessing the question that begs to be asked after reading that statement is if the recent pullback in commodities (which may or may not be over) is a good thing or a bad thing? After rereading Kleintop's statement, it sound to me like his answer is, "yes." Helpful, eh? To be fair, it is sometimes tough to give a reporter the sound bite they are looking for to fill their page. And on a day like Monday, where there was a lot of "noise" but not a lot of important stuff happening, it can indeed be tough to come up with something meaningful to say. However, instead of an "On the one hand... and yet on the other hand" type of response, we believe it is more productive to stick to the task of identifying the driving forces each day. And from where I sit, the bottom line - boring as it may be - it that it's still a trader's market that remains all about the buck. For example, we had rumors galore out of the Eurozone in relation to the trials and tribulations of Greece. With the Greeks talking about bailing on the EU and/or needing to restructure their debt, the Euro fell and the dollar rose - well, for a while. But then, just before lunch, the dollar started dropping and the buy programs kicked in; taking the stock market up to the highs of the day in short order. There were other stories as well yesterday. However, the bottom line is that stocks (a) appear to remain tethered to the movements in the greenback and (b) are continuing to consolidate the recent gains. Yes, I've mentioned this a time or two before. And frankly, this assessment isn't likely to get me quoted in the media. But it does appear to be what IS happening at the present time. Turning to this morning... Stocks are firmer in the early going on the back of improving overseas markets and a big M&A deal between Microsoft and Skype. On the Economic front... The government reported that Import Prices for the month of April rose by +2.2%, which was above the consensus for an increase of +1.7%. The March reading was revised lower to 2.6% from 2.7% Export prices rose by +1.1%, below last month’s revised level of +1.5%. Thought for the day... Remember that there is more to life than increasing its pace... Pre-Game Indicators Here are the Pre-Market indicators we review each morning before the opening bell...
Wall Street Research Summary Upgrades:
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