I can't light no more of your darkness

All my pictures seem to fade to black and white

I'm growin' tired, and time stands still before me

Frozen here on the ladder of my life

Too late to save myself from falling

I took a chance and changed your way of life

But you misread my meanin' when I met you

Closed the door and left me blinded by the light

I’m one of those people that gets melancholy during winter, so the end of summer is usually a bummer. But this summer was so rough, I’m looking forward to the dirtying slushy streets of New York City and throngs of crowds clogging the sidewalks for a glimpse at the Rockefeller Christmas tree.  In fact, by then, we’ll have even more to celebrate.  For now, however, let’s admit the sun going down on summer is a gift.  The heat map was not an ode to Christmas, but the daily reminder we are in a meat grinder.

There were two sectors in the green.  Health care is becoming a favorite safe haven, but Communication Services was higher in part from having been battered so much.

All this bad news is good news in the sense financial conditions are deteriorating at the fastest pace ever, save for the throes of the financial crisis that led to the big bank bailout.

Too Much Pessimism

I have to say I think there is too much pessimism, especially among the experts. There is work to do, and you are going to hear a lot of experts complain the retail investors must bail, as if that would magically change the fundamentals of any company

Investors are as bearish as ever, but they aren’t panicking.

From time to time, you must ride these episodes out. The last thing you want to do is quit near the top of Heartbreak Hill.

Portfolio Approach

There are no sector weighting changes in our Hotline Model Portfolio.

Today’s Session

Spiking bond yields around the world are pushing money out of most assets except the US dollar.  There is more of a feel of panic this morning and some selling is on autopilot.

Central banks continue to hike rates with the BOE (Bank of England) hiking 50 bps point, but modeling suggests the next hike will be 100 bps.

In the United States, all eyes are on the two-year bonds, which has erupted and is the very definition of parabolic.   Interestingly, the inverted yields between the two and ten-year bond yields is screaming recession.

But the battle over inflation isn’t official over.  The fact is, there will be inflation issues for a long time, and the best we can hope for is a firm top and slow but steady decline.

This morning, equity indices have climbed off their lows, but it’s doubtful anyone will want to take the bait.

Remember, the last five Fridays have seen 1.0%+ moves, and today will be no different.  At this very moment, it’s hard to image it being to the upside.

Comments

Charles, I like the music references the last two days. Some of my old favorites. Can't wait for some reference to "Noting going to stop us now!" in the future. Although that likely is not to happen anytime soon. Terry Dowler on 9/23/2022 10:37:14 AM

I appreciate so much, Charles, your tireless work to keep us informed of all that's happening. I know you have a lot of late nights working and early morning risings to get it all done. Thank you! Esther Bell on 9/23/2022 4:37:20 PM

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