Various thoughts
Thursday December 9...)
If the year were a day, the markets have entered that lull between Asia shutting down, GMT and EST. It's a vague hour, sometimes longer than others, but we are there now, metaphorically speaking, for 2021, imo.
In the news:
The CEO of South Africa's largest health network opined yesterday that the Omicron virus is so mild it could herald the end of COVID. For some reason, the US media skipped that one. Tension in the Ukraine, a slow starting news item recently, is still looking for an audience: The Washington establishment, dissatisfied with Omicron mortality rates is toying with a new war or, perhaps a war with Russia is their newest toy. At any rate military spending is problematic if there's no one to fight or play soldiers with. In global politics, the China boycott has about the same mojo as "Free Jussie" in Chicago...Seriously, we are perhaps in a more dangerous condition as a nation contemplating a war, I think, than one suffering a recession or crime. We are bored.
Equity markets are predictably discounting an impending US / Russia shoot out with the same nonchalance they might for GME's earnings-miss yesterday, or a bad NFP number: new highs. One day we'll look back on boring with misty eyes and fond hearts.
ICYMI... LMT Q3 earnings and Backlog ... -10%
The BCOM, a bellwether of inflation-wary AUM, holds its 200-day MA tenuously. The metals sector is ending the year like an aging Hollywood starlet and even FOX has stopped running ads for gold and silver coins. Although commodity prices are high, oil for instance, there is no shortage of them or a shortage of narratives about shortages. Just one of which, I think, has the smack of reality: chips. The idea is that longs are holding out for chips to catch up. Meanwhile the producers are producing apace. It is remarkable how much mental energy it takes to hold a position that does nothing for almost a year, like copper. Usually, stale longs are second in line to scared money.
BCOM daily data
As for positioning in the aggregate, monthly NYMEX WTI open interest fell a marginal 1000 lots below its March 2019 low to the lowest level since October 2016 yesterday. Note to the JMMC: Money goes where it is well treated. Comex copper OI posted a new low for 2021 yesterday down 100k lots from its February high of 275K. Exodus doesn't quite say it.
WTI continuous monthly data. OI = black line
Platinum, traveling to the beat of a different drum is getting short again. XPT is an interesting study in its surrogacy for commodities in general. it's one of the largest small markets and risk-on AUM can't hide in the forests of vol sellers and global trade. What you see is what it is. If it's cheap going into 2022 and OI is over 75k ... you know...
Plunging open interest implies a positioning void, not unlike an imploding financial black hole in commodities. And immho, boredom is as powerful as fomo. Considering the amount of money in the system, and overweighted equity names and dearth of transitory alternatives... somewhere in the early days of 2022 we could see a land office market.
Back in the early days of the tech bubble in the 90s ,Jeff Vinik was criticized for owning names with 700 PEs like Parametric (delisted by March 2001). He said, " I'm not paid to be right on stocks. I'm paid to buy them."
Entirely my thoughts written for friends and sent to friends