This Was The Week That Wasn’t – Weekly Blog # 761

In the earlier days of popular US television, there was a program of satirical commentary. It was an American version of a British program with the same name, abbreviated TWTWTW.

Looking for leads related to writing my weekly blog, I studied the four-day Thanksgiving week and concluded there really wasn’t much there. Evidently, much of the normal global trading around “turkey day” saw volume at about half its normal level.

Nevertheless, there were some snippets which may point to significant trends in the coming weeks. I found the following briefs of possible value in thinking about future periods:

1. The dollar index has dropped to 105 from 115 recently.
2. Taxable bond fund inflows were the largest since the week of January 8^th, 1982.
3. The 2-year Treasury yield remained stable at 4.48%, while 10- and 30-year rates were 3.70% and 3.75%, respectively.
4. S&P warned that the corporate default rate could double if inflation remains high.
5. Goldman’s strategist believes the bear market would last into ’23.
6. BofA predicts 2023 gains of 25% for copper, 15-20% for gold, 12-13% for US investment grade bonds, 7-8% for US Treasuries, and 5-6% for oil.
7. My son Steve commented for Royce Partners that small-caps on average gain 12% and 16% in even-numbered years during the November-April period. (These are Presidential and Mid-term years.)
8. Howard Marks reminded us of the inevitably of change. He also commented that the private equity and venture capital markets are too crowded. (Remember the losing percentage of favorites at the racetrack.)
9. China region US-registered mutual funds were the worst performers in the shortened week. Over the weekend, there were riots in the industrial and financial capital of Shanghai and elsewhere. These riots were the response to hardships caused by lockdowns to prevent COVID-19 spreading. (Apparently, the Chinese vaccine is not as powerful those produced in US and Europe.)

Many will view this list as bearish but recognize that pundits and at least half the politicians are bullish. They believe we have seen a stock market bottom and are discounting a rising economy. It is possible they may be correct.

To those who have studied economic and market history, it would be ironic if they were right, as it would be just a matter of time before a major recession/depression occurs. Societies often need these dislocations to initiate the kind of structural change necessary to correct for deep imbalances.

Please share your thoughts with me.

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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.