Illogical Discourse Marries Absurd Expectations On Main Street And Wall Street This Morning: The Action For April 25, 2024
The Times covers abortion among several other hot issues this morning and notes how the Court is reversing the standards in place for over 50 years. This despite the steep decline in legal abortions since the 1980s, but coincident with the unexplained rise in abortions since 2016. Assuming the Court has no idea why abortion has ticked up lately, the fundamental issue is likely ideological, with the conservatives bent on removing nation-wide laws or policies on anything they don’t approve of as long as it isn’t in the Constitution. This ideological thrust in turn stems from the offense that culture warriors give to conservatives, exemplified in the pro-abortion plurality’s motto that abortion is healthcare. This motto lacks any reasoning applicable to the common case of abortion being performed to end an unwanted pregnancy due to family care issues, income and education aspirations of the woman. While abortion incidence seemed destined to follow the Clinton line of “safe, legal and rare,” it’s now less rare and arguably because of the same conflation of issues that makes the pro-abortion plurality look extremist. As the country ages it’s possible that the majority who favor a degree of choice will wither, as the elderly have little personal stake in abortion and may get sick of the illogic on both sides. Such a divide is already visible in the antics of Trump and the contradictory policies of Biden.
Culture war without edifying public discourse destroys civic attitudes, a precursor to national decline. This modest correction we’re undergoing now hinges on cultural issues like social media and the devastating impact of technology automation on peoples’ jobs and habits. As economic malaise manifests in diminishing growth and simultaneous inflation, it’s likely this correction persists along with the angst over the election.
The bears have control for the moment as several indicators reveal pessimism on corporate earnings and the macro environment. These include:
S&P 500 Technicals: The top 40 in the S&P 500 look set to move the market lower.
Quality Of Earnings Trend: Over the past few quarters the largest firms have generally experienced worsening credit terms, margins and inventories, signaling future profit stagnation or decline.
Economic Data: The latest economic data regarding inflation is worse than expected, a negative sign for equities.
Geopolitical Issues: Developments around Eurasia are a clear negative for equities.
But based on the action yesterday and overnight there are several factors that likely flip the markets around next week, including:
High Yield Credit Spreads: The cost of borrowing is falling for lower-rated firms compared to their AAA siblings, a confident signal of an improving economy.
Zinc Prices: Few commodities are as broadly important as zinc, and rising prices for zinc signal better than expected global demand, which is usually good for equities.
Copper Prices: Copper makes the energy transition happen but is also a barometer of global growth, and rising prices signal growth may be better than expected.
Yesterday at the close I sold my position in the levered ETF UPRO, consequently my current positions include 3M (MMM), Pfizer (PFE), and a moderate position in SPXU, which nets out to a moderate short position in equities.