10 Dec I Have Not Witnessed Such a Myopic Destruction During My 30 Years in the Industry.
The Russell 2000 surged 1.8% yesterday on the strength of commodity companies, more specifically the energy issues that rose 6.1%. Unless one has been living in a cave, all commodity companies have been crushed, decimation that has not spared the debt. Bloomberg writes the Russell 2000 oil companies plunged 7.2% on Monday. Personally I have not witnessed such a myopic destruction during my 30 years in the industry.
I am long several commodity companies and the rally is a breadth of fresh air as many, including me, are only hanging on by our fingernails questioning every fact and assumption. What is fact and what is fiction? What is objective information and what is emotional thinking?
As most know the market is punctuated with great times of elation and great times of despair. In my view fear is a gazillion times more powerful than greed.
Was there a capitulation? Unfortunately only history can answer this question but I will write I have not felt this much anxiety since 2008-09 when the face of capitalism changed daily. Perhaps the only concrete statement to make is the commodity entities are vastly oversold and an argument can be made many issues are priced for a very deep recession.
There is little on today’s economic calendar thus trading will be dictated by the headlines.
Last night the foreign markets were up. London was up 0.13%, Paris up 0.48% and Frankfurt up 0.82%. Japan was down 2.25% and Hang Sang up 0.16%.
The Dow should open quietly lower. A large discount ware house chain posted profits that exceeded expectations. Is the low margin buyer returning to stores, the impact of lower oil prices? Tomorrow’s retail sales data can be telling. The 10-year is unchanged at a 2.22% yield.