16 Oct IS A MINSKY MOMENT AT HAND?
Depending upon one’s preconceived bias, yesterday’s economic data can be viewed as either half full or half empty.
Initial jobless claims printed above consensus 898k. On the other hand, continuing claims were substantially lower than expected at just over 10 million, the lowest level since March 27.
The Empire Manufacturing Index was a little weaker than forecast but the Philly Fed was twice as strong as expected. The consistency between the two regional manufacturing indices is that the “new orders index” rose in both surveys.
How will today’s retail sales data be interpreted.
Radically changing topics, Goldman wrote yesterday growth stocks could be at a “Minsky Moment, a phenomenon where a period of consistently strong returns breeds recklessness that becomes unsustainable and ends in a market collapse.
It is the proverbial “ah ha” moment where reality crushes unfounded thinking. The disparity between value and growth stocks according to Goldman is at the greatest difference since the 1930s, the decade before when Benjamin Graham wrote the Intelligent Investor.
Commenting upon yesterday’s market activity, equities trimmed losses as all awaited news on negotiations over a fresh round of stimulus amid a resurgence in COVID cases around the world. Energy and financials…aka value…led the rebound. As widely noted energy and financials are down about 50% and 37% YTD, respectively.
What will happen today?
Last night the foreign markets were mixed. London was up 1.33%, Paris p 1.49% and Frankfurt up 0.89%. China was up 0.14%, Japan down 0.41% and Hang Sang up 0.94%.
The Dow should open flat. The 10-year is up 2/32 to yield 0.73%.