A TYPICAL POST MEMORIAL DAY TRADING SESSION

The S & P 500 fluctuated and the NASDAQ little changed after manufacturing data topped estimates.  The statistics also demonstrated manufacturers are struggling because of supply shortages and labor constraints.  Oil traded to a two and half year high because of strong demand and bullish forecast, an optimistic outlook partially predicated upon the proposed energy policy of the Biden Administration.

Commenting about the ISM manufacturing report, the labor component of this tier I indicator suggested that Friday’s BLS could again disappoint, the result of supply constraints via government policy that pays people more not to work rather than too work.

Will cost push (labor inflation) become a major narrative?

Speaking of potential inflation, one fifth of US beef capacity was wiped out because of a cyber-attack.  How will prices be affected?  More importantly this is the second-high profile attack in three weeks.  At some juncture confidence will be shaken about today’s cyber connected world.

Changing topics, it appears numerous articles are now written stating the iron clast natural laws of economics are no longer valid.  These laws have taken the same path as the buggy whip.  Innovation has invalidated the knowledge in many economic text books.

Similarly, knowledge has eliminated the need of fossil energy.  ESG investing is prudent and should be the primary strategy regardless of its investing or lack of there of merits.

Again, quoting the former head of ESG investing for BlackRock—the world’s largest asset manager and greatest ESG champion—the vast majority of the companies in the ESG sector lack investing merits.  Even with government support, many are economically unviable.

Wow! I cynically ask is there a political motive behind these articles?  Most believe the Administration is experimenting with Modern Monetary Theory (MMT) to fund its progressive ESG agenda.

What will happen today?  Will the Fed’ Beige Book or the statistical compilation utilized at the upcoming FOMC meeting influence trading?

Last night the foreign markets were mixed.  London was up 0.18%, Paris up 0.30% and Frankfurt up 0.15%.  China was down 0.76%, Japan up 0.46% and Hang Seng down 0.58%.

The Dow should open flat, NASDAQ down nominally. Oil is up another 1.5%, perhaps the result of rising Middle East tensions, the unlikelihood of an Iranian deal, and increased demand.  The 10-year is unchanged at 1.61%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.