Is Bad News Good News? With Tony Greer

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1:24And now to the top analysis of today's markets.

1:40is bad news good news hi everyone welcome to the real vision daily briefing with me today is tony greer editor of the morning navigator newsletter hi tony how you doing i'm good maggie how you doing today i'm okay i'm okay for a tuesday and um looks like everybody else is feeling okay too we had an update for stocks both the nasdaq and the s &p up over one percent looks like they actually might have ended sort of with the strongest levels of the day. Bond yields lower, the dollar lower after some weak jobs data. What's top of mind for you this Tuesday? Yeah, that was, you know, to me, it's the market is sort of working its way out of a waterfall that we just traded into, right?

2:17The market to me was tense about a couple of things, including Japan relaxing yield curve control, including the Fitch downgrade of US debt, In my opinion, that had a direct effect on the bond market. I don't care what anybody says. But neither of those things should have been fatal for the U.S. stock market, and neither of them were. Right in the middle of August, we saw a dip to 43.50 in the S &P right into moving average support. We saw a VIX spike to 19. We saw our yield curve flatten, two-year yields rise above 5%, all the typical panic-type stuff. And we worked our way out of that. Right.

2:57We saw selling. We saw a pullback in a moving averages. We saw sentiment go from, you know, extreme fear back to, you know, negativity and a little excuse me from greed back to neutral, back to a little bit of fear in the markets. And we bounce out of that. You know, that's traditionally when you should be buying stocks and things are no different on this breakout rally. You know, technology, everybody wanted to sell NVIDIA, you know, call it a high after they printed their third quarter earnings and the stock traded up above$500 and had an outside day down and things like that. But NVIDIA still had a 6 % to back to back 6 % gains right last week and the week before.

3:38So that rally clearly isn't over just yet. It had another. So I think another really strong rally today. I think it was almost a two sigma rally today. But we're rallying sharply behind tech as rates fall, right? That's something that we've seen before, something that we've discussed here. And today, we got really, really dramatically important closes with the NASDAQ and S &P back up above their 50-day moving average while the VIX just melts down below its 50-day moving average below 15. And it looks like the plunge pool is over and we might go back to bull market rally mode. So we'll see what happens next, Maggie.

4:15But that's what it's looking like as of today's close. Yeah, it's funny. And that the NVIDIA, so many people, you're right, were calling the top and sounding bearish. And there are people who still just think that this tech rally is overdone. But every time someone's tried to move on that, they've just gotten killed. Yeah, there's no follow through on the downside, right? There's no big reversal to NVIDIA where it goes from, you know, that new high and then trades negative and trades into a hole and everybody's getting out. That's not the story. There's still a lot more money flow coming into that name, coming into the sector.

4:49And if you look at, you know, where NVIDIA has been beating the crap and, you know, eating the lunch of their opponents, you know, you can see why. You know, they just put up like a 16 billion dollar quarter. And that's tough to beat when when nobody else is putting up numbers like that. It's all in their A.I. division. So we'll see. You know, stocks, everybody on the street still raising prices on it. So the chase is still on. The religion is still intact, as they say. So we have, as you say, the NASDAQ. I think you said the NASDAQ chart over. The NASDAQ on this little winning streak now, it seems to be rebounding from that.

5:24Does it feel like it's sustainable? How are you feeling about sentiment around this? Now, we are in this kind of end of August week. We were just joking before we came on air that a lot of people feel like summer's over. But you do have that last push of people who are out for the holidays. globally, people tend to be plugging back in in earnest after we get into September. But how does it feel? When you look at that chart, how are you feeling about this rally? Well, when I see that NVIDIA reports a quarter like that and it doesn't tip the NASDAQ over, rather starts fueling it, I get pretty excited about what's going on.

5:58Today, the leadership is all big tech again. I mean, we got Facebook, Google, Apple, Intel up over 2%, Tesla and NVIDIA up over 5 % today. So, you know, then you have today is just a typical day where you've got basic materials that joins in with the rally. And then the next thing, it's every sector is up and to the right. You know, today you had basic materials join into the tech rally behind a lot of the steel stocks are strong today. We saw nearly two sigma rallies in home builders and the Russell and in consumer discretion, consumer discretionary. That's pretty wide participation. You know, on a day that the S &P is regaining a moving average, it's kind of to me the market looking around saying, you know, as the coast is clear, it looks like we're going to get back into rally mode.

6:43And for me, when things go what I call blue sky trading, when they trade into the moving averages and then recover them within the context of a bull market, those are resumption of trend moves to me. And those are moves that I like to go with. So I think that this type of move is sustainable. I remain pretty bullish in stocks. and we're going to see what the rest of the year has in store, but it sure looks like we're going to have a lot more of tech leadership with some type of natural resource participation, if that's fair to say, Maggie. So all systems look okay for the S &P from here on out.

7:18Yeah, Beau has a question. It's a good one. Tony, was today's action more of bad news, moving rate cut expectations closer, or simply the dangers of holding short positions? I just want to, for those who may have missed it, so we did have some jolts job data out, showed job openings declining to their lowest level in, I think, two years. We're going to get more news on the labor market on Friday. I believe we have a jobs number on Friday. I don't know. What do you think, Tony? Is it about rates still? Is that the driver, or is it just people who got maybe caught up and on the wrong side of those short positions?

7:56Yeah, that's what it feels like. Like, you know, people are dying to take shots at the S &P because they're so afraid of the US economy, you know, and I totally get that. But the data isn't indicating that the economy is going into a hole, whether it's real, whether no matter what, you know, that's the data is the data that the market trades off of. So, you know, people are skeptical about the data. People are skeptical about why the data has been so, you know, slightly positive. I guess it's fair to say, which is why rates have been driving higher. You know, to me, it's kind of we're back into that phase where we can handle higher yields because the economic strength is there.

8:32You know, and I'm not saying the economy is going like gangbusters at all, but we're certainly not seeing recessionary evidence. And if yields can ratchet higher during that, that's usually when the stock market can bear higher yields when you see the economy, you know, going along alongside it. And so, you know, I feel like we could be set up for, you know, one of those years like 16, 17 or 2000, I guess, 11 and 12, where rates grinded higher. The economy got a little bit stronger and the S &P rallied sharply. So I don't you know, I'm not taking shots at the bear side of this market in any stretch by any stretch of the imagination.

9:07I've been writing since before NVIDIA earnings that I was posturing to get into the tech rally if I could. And I just feel like I didn't get a good enough dip to get into it. But I bought some other things on the dip, like as usual, kind of marching procedure when we get an S &P waterfall. And some of that stuff is starting to perform a little bit better now. So we'll see what happens. But I feel like that was a run of the mill episode that we just had. Lasted several weeks. Cleared out a lot of longs. Took sentiment from wildly positive right back to neutral, if not negative. And like I said, right back to the point where like all of the wise guys want to take a shot at the S &P.

9:43every time it shows signs of weakness and they turn around and wind up buying in their shorts back when nothing collapses. So that's kind of very much the mode that I've been in and remain in through this dip and probably through the next one too. I'm an S &P bull. Yeah. So it is going to get really interesting because we know, so we had Jackson Hole last week. We know the Fed is data dependent. Andreas had a conversation with Danielle DiMartino Booth and Dennis Lockhart after just this week. It's just dropped on the platform. yesterday. And they were kind of talking about this. And of course, everyone trying to figure out that inflation story, right?

10:22The growth and inflation story. And is there a sweet spot to balance or do we need to worry about resurging inflation? And Danielle brought up a really, really interesting point about looking at this through a global lens. Let's have a listen to what she said and we'll talk on the other side. I think it is because the United States economy does not exist in a vacuum. So to suggest that the third largest exporting nation in the world, Germany is in recession. They've just had some revisions that have given them a third consecutive quarter of contraction. We see what's happening in China. China is exporting deflation.

10:56I don't think that we can discount that effect. Can we quantify it? Well, heavens no. But I don't think by the same regard that we can dismiss what's happening in China. And the fact that it looks as if the Chinese government right now has the sufficient stimulus to help their domestic economy, but not the world at large, as was the case with the most recently, the 2015-2016 industrial recession. So we're not going to have some large commodity super cycle break out right now because of what's happening in China. And that's why we're seeing West Texas Intermediate below$80 today and two weeks in a global demand is what I'm saying is going to play into what happens.

11:3640 % of US S &P 500 components, they get their revenues overseas. So we have to be mindful that every time the economics community, mostly on the sell side, says, oh, it's a great decoupling. Well, we've heard this before. And decouplings tend to last for about as long as the narrative lasts. And then it goes away again because we are a globally connected, interdependent economy. Hey, everyone. We're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

12:18Danielle, of course, one of the great Fed watchers out there. And Lockhart was a former Atlanta Fed president. So it was a really fantastic conversation they had to hear the whole thing or any of our other content. Hit the links or hit the QR code and figure out how to join our community. So, Tony, I mean, we have been talking about China a lot because that weakness there, everybody kind of wondering what that means for global growth. Is it an offset to the U.S.? And also what it means for commodity prices. You know, is that on your radar? Are you are you know, what are you thinking about inflation these days?

12:54Yeah. Yeah. The China story and the inflation story are a little bit different, but I can see how they're intertwined. And China slowing down is what kind of punches all my energy longs in the face when the market should be rallying. And then you get some weak data out of China and oil sags,$4 or$5 or something like that. So that does play into the trading landscape without a doubt. Inflation, from my perspective, we have politically structural inflation, right? It's embedded into our economy now. We're moving toward net zero 2030 and all of the associated plans with that. So that right there is structural inflation.

13:32And unless that turns around, we're going to have, you know, fits and starts of, you know, battling sort of brush fires in inflation where it's going to pop up and then back off again. So I do think that we're in for more periods of sort of, you know, rising and more persistent inflation. The Fed just did a great job of getting it off of the highs of, you know, eight, 9 % back down to what are we, what handles are we Now I'm losing track three, 4%, I guess, CPI. So in my opinion, that's probably where it's going to level off. Like I'm not expecting it to go back to 2 % while we're trying to transition to net zero because the math doesn't work.

14:07You know, it's the same way that if we're going to, you know, it seems like, you know, copper can't really collapse because of inventories being so low and the demand of, you know, the transition to battery powered everything, the math doesn't work, right? So that's why copper doesn't collapse and why aluminum and base metals don't collapse. So I'm kind of the same way with the net zero movement and the fact that we've got all kinds of executive orders against drilling for fossil fuels. So if we're going to continue to do that, that to me is just going to cause more bouts with inflation rather than less.

14:43And just from a sort of trader standpoint, you expect this to be the level that CPI possibly levels off and then starts ticking higher. The bond market looks like it wants to anticipate that. If you ask me, the bond market is always sort of anticipating a little bit more inflation from areas that I can't really identify lately, you know, when rates are spiking and things like that. But I think that that's the real danger. And I think that the bond market, you know, being down for the third consecutive year in a row, you know, which is a total anomaly in the bond market. I feel like that's part of the story, right, is that inflation is persistent and, you know, the bond market can't bear it year in, year out.

15:21So that's what we're seeing. And I love bigger. I love the way you described it, like brush fires. I think that's really, really apropos because it is these kind of flare ups, but it's been creating a lot of volatility in the bond market. But add to that, people are trying to figure out. So you've got from the demand side, the sort of structural story and then some of the other cyclical things that are going on, right? And now you also have to worry about supply. And that's sort of feeding into the comments you made about the green energy movement. Those larger narratives are affecting supply.

15:56We also today, if you're looking at any oil headlines, we're talking about a hurricane in the Gulf of Mexico. Whenever we get into this season, happens every year, but we always worry about their temporary, but we worry about supply shocks or refineries going off or, you know, their evacuating platforms. So, you know, that that in the short term is going to make it a little tricky to read through, isn't it? Yeah, well, gasoline inventories are still, you know, kind of at the low end of five year averages. We just had a huge refinery fire at the Marathon Petroleum refinery. that sort of keeps the markets nervous and on edge.

16:31I won't say that that fire itself tightens spreads, but calendar spreads had been sort of tightening into that. And then you have the headlines like, you know, fire at a refinery and the market just sort of is very tense on headlines like that. I think that's the reason why, you know, oil has been hanging in and around 80, where it likes these prices rather than, you know, two months ago where it liked the price is around$70. So the market's a little bit tighter, Gas prices are a little higher. Diesel is bid again. So the complex is coming to life. I won't say that it looks like it's set to go 100 bid any day in the immediate future.

17:07But at least from a bull market perspective, you can visibly see the markets tightening up. You're seeing inventory draws, calendar spreads tightening, the price staying bid. So I can stay an oil bull from these levels with no problem at all. Yeah. Yeah. In fact, I think it was Gio, when we were talking to him yesterday, kind of commented that given how negative the news is out of China, it's surprising to some that you haven't seen oil actually lower, that it's been holding in, because that news should have been super negative for it, right? Yeah, yeah. What's been amazing, Maggie, is you look at all this negative economic data, whether it's weak number here, weak data in China, and you look at gasoline demand, and it doesn't budge.

17:47It doesn't budge at all, you know what I mean? So that's kind of the story that's been, I guess, the conflicting story that has been coming across the tape. It keeps oil from running away, keeps oil and gasoline from running away, and just keeps a very measured move on the markets. It's really hard to navigate the China story for me. I try to stay on local soil and just keep an eye on what they're doing in terms of make sure that China demand is there, broadly speaking, and that there's not too much chicanery in the markets. But things look like the market can be fairly constructive and stay on its feet from here, that's for sure.

18:23So we're getting a lot of comments about your headphones. People are really digging these headphones, Tony. Really? I like being really plugged in. I feel like you're sitting like right next to me. And now everybody can hear me with my new microphone that we've got. So hopefully we'll be in really good audio visual shape going forward. I know. I feel like it's completely appropriate because, I mean, you don't DJ. We know Jared does. I don't think you do, but we know you're a music nut. Yeah. Yeah. No spinning wheels over here for me. I just kind of bang away at the guitar every once in a while.

18:54And we keep threatening there will be some bad performance at some event. We're going to get all you talented multitasking people together. Yeah, I want to. Wanted to ask you if you noticed the move in Bitcoin today. So Bitcoin had a big move of 7%. Coinbase was up 14%. This was after a U.S. Court of Appeals ruled in favor of Grayscale, saying the SEC could not deny the company's application to convert Grayscale Bitcoin trust into an ETF. That's a very long way of saying a lot of people think that ruling could help start to pave the way for a spot Bitcoin ETF. I mean, that's the holy grail. Everybody keeps hoping it's coming.

19:34Obviously, it's a long, bumpy road, but I'll sort of move in the right direction. But boy, you saw prices rebound. I'm wondering if it was that as much as it was just this risk on appetite back again. Is that area of the market getting interesting to you? You know, it's fairly interesting. Like, it's not, I still think that there are a thousand better trades on the board than chasing Bitcoin around. You know, I mean, after all, after this three sigma 7 % rally that we saw today on the great news, Bitcoin has afforded itself a rally into the middle of the recent 25, 35 range, right, give or take.

20:08So I would have thought it would have been up a little bit more, to be quite honest, after this headline. But at least it's going in the right direction. It's testing moving averages on the upside. And if it can get through there, great. But it just happens today to be like a sort of feather in the risk on cap. Right. If you're you know, you want to trade things from the long side, especially tech, it's helpful to look over and see Bitcoin rallying five percent. You know, it's just kind of an animal spirit igniter at some level. You're like, if people are buying Bitcoin, then, you know, I can probably buy semiconductors up one percent and make some money, which, you know, turned out to be totally possible today.

20:46and things like that. Today, it was just a case of the technology boat, including Bitcoin and big tech, lifted all the rest of the boats. There was a lot of energy in negative territory earlier this morning, aerospace and defense, consumer staples, and they all balanced. They all balanced to settle in the black today. And just pure index-driven gravity at that point. Interesting. Alex is commenting, wheat prices are killing me. Back to 2020 prices as if there's no war in Ukraine. Yeah, don't ask me questions about the grain market. I've become purely a spectator. I'm afraid to even comment on it.

21:28It's hard. Oh, man. There have been two spikes. Yeah, exactly. There have been two spikes. Yeah, and it came right back down, right? There have been two spikes this year that have looked like, you know, the charts both look like, you're like, wow, we might be set up for an unbelievable grain market. and they got clobbered as fast as they rallied, both of them. And so when you see things like that, that's just like hands off. I do not have a good handle on what's going on and much less of an edge. So I'm not trading anything in the green space. For those of you who don't, check out Ms. Schneider.

22:00Alex, if you're thinking about it, she is a longtime trader in and follower of food prices and always has a lot to say about that. I would tell you to go look on the platform, but you got to stay really current because she'll be short-term in and out. But if you hit her up on Twitter, X, whatever we're calling it, I always have to hesitate. It's going to be really hard for me to wrap my head around that, Tony. If you message her, she'll probably respond to you. She's awesome about doing that. And that's always, all the food commodities are always on her radar. And for those of you who want to dig into the Bitcoin story as well, we're going to have much more on the distillery, which is going to be live tomorrow at 12 noon Eastern.

22:44So if you want to get a handle on how much of it's really about that and how much of it is just maybe it moving in line with risk assets, the team's going to break it down on the distillery. So I would encourage you to go check that out. Kevin asking, are smaller cap semis starting to look more interesting since the risk on news of the day? Yeah, they're going to get bid up, you know, with the sector. If, you know, if NVIDIA is going to fly again and semis and tech and everything is going to start getting on its horse, then I would imagine that they can participate smaller cap semis to, you know, and all the various sectors, subsectors of tech in varying degrees like we saw today.

23:22So, you know, you can pick the horse that you want to be on. But if the NASDAQ recovers, you know, all the moving averages again and NVIDIA didn't collapse after reporting, you know, world record breaking third quarter sales, it feels like the tech rally is pretty sustainable to me. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

23:49uh we had a really interesting question for those who were this is it's just on everyone's mind isn't it tony because so many people are sitting on such nice gains and they just don't want to lose it they don't want to watch that get drawn down but they're for this very reason every time somebody tries to get out of it then you got to worry about getting back in it it's a tough one isn't it? Oh, yeah. Yeah. Tech's tricky. You know, we had that big drawdown last year and I feel like nobody in retail even flinched. You know, we had a huge down year in tech. Everybody's Facebook, Google, Amazon, Apple got all beat up.