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Morning Commentary


By Charles Payne, CEO & Principal Analyst
9/10/2021 10:12 AM

S&P 500 Index



Communication Services XLC



Consumer Discretionary XLY



Consumer Staples XLP



Energy XLE



Financials XLF



Health Care XLV



Industrials XLI



Materials XLB



Real Estate XLRE



Technology XLK



Utilities XLU



Yesterday, the market put up a fight, but buyers were still reluctant and ‘selling begets selling.’ Nevertheless, three cyclical sectors held on by their fingernails along with the airlines, suggesting budding optimism that the Delta variant is peaking. Meanwhile, four down days and little more than 1%. is not the end of the world.  Keep an eye on the 50-day moving average, which has been magical support.

"This is not about freedom or personal choice"

In recent weeks, politicians have talked a lot less about infections, deaths, and quarantine. Even mentions of vaccines had begun to come down, but that’s all changed after yesterday.

No More Mr. Nice Guy

President Biden announced a series of measures that will essentially make COVID-19 vaccinations mandatory for 100 million American workers. He says it’s not about freedom. Instead, it is “about protecting yourself and those around you, the people you work with, the people you care about, the people you love.”

Employing a new “emergency standard,” the Labor Department will levy fines of up to $14,000 per violation for businesses that fail to comply. In addition, federal government workers have 75 days to get vaccinated or face termination. These new rules are sure to be challenged in court, just as the eviction moratorium was - but by then, the goal might be achieved.

Impact of Government Mandate

In addition to an avalanche of lawsuits, the new federal mandate will test the 72% of unvaccinated that told a Washington Post pollster they would quit if vaccination was made mandatory. Of course, if the shop across the street is under the same guidelines, finding a new gig that doesn’t mandate vaccines will be difficult. There will be a hit to the workforce that’s already suffering through the great workers’ strike of 2021.

Small Business

A statement from the Small Business & Entrepreneurship Council expressed dismay at this desperate, ham-fisted approach.

“I am staunchly pro-vax, but staunchly anti-mandate in this regard. President Biden needs to get more innovative and bring business leaders to the table for their ideas. Instead, he will bring more businesses to their knees with this punitive and job-killing approach.”

Karen Kerrigan

President & CEO

SBE Council

Nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship’s full statement:

I suspect we will hear from more business groups, especially those representing small businesses. 

What to Watch

The Russell 2000 was higher until 3:59:59 pm; then, it joined other major equity indices in the loss column. The index was on fire for a long time. But it has since stumbled, and more recently, it’s been stuck in a rut. It’s range-bound, so a foundation has been built.

The Dow Jones Transportation Index traded in lockstep with the S&P 500 over the past five years until a few months ago, when the latter kept moving higher while the former began to nosedive. There are unique factors, including supply chain issues and COVID-19 restrictions. I think there are opportunities here.

Never Forget

Tomorrow is the 20th anniversary of 9/11, and no words can capture what we’ve gone through as a nation, but we should pause and consider how we came together. Our office was a few blocks away, and my gym was so close to the Twin Towers, it became a part of the crime scene. So, please, take a moment to think of all those lives lost during the attacks and since fighting for freedom.

Then hug your family.

Portfolio Approach

There are no weighting changes this morning in our Hotline Model Portfolio.

Today’s Session

The market is indicating an up open with more advancers than decliners, more new highs than lows, and up volume edged out down volume.

It was a light trading day but internals were better.

The market is actually looking higher this morning, which should not be a surprise for the year and according to history.

It’s been a year of wild swings particularly on the upside.  The last time the S&P 500 was off four days in a row, it rebound to rally in nine of the next ten sessions, which included a seven-day winning streak.

Buy the Dip?

More broadly, when the market has gone through August without a 5% drawdown, the rest of the year sees the market finish higher.  This trend currently has a one hundred percent success rate. 

History says: yes, buy the dip.

Inflation Watch

Producer prices erupted higher coming in slightly higher than consensus.  The so-called core number was in line with consensus at +0.6% down from +1.0% in the prior month.

The street is ignoring the news.

Re: The Vaccine Mandate - My first thought when I heard of this yesterday, is that any company with 102 employees will find 3 to fire immediately. I'm vaxxed but don't like mandates.

Charles Lucente on 9/10/2021 10:20:46 AM
I think he successfully changed the narrative from Afghanistan mess to covid mandates

Mike on 9/10/2021 10:47:03 AM
Go home and hug your family Charles......and hugs to you for all that you help.

Catherine Arbogast on 9/10/2021 3:54:36 PM

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