Closet Bulls Scream Me Too As The Shorts Get Squeezed As Badly As The Me-Too Movement At Court: The Action For April 26, 2024
Issues at Court plague the Times front page this morning, as the conservatives on the Supreme Court continue ruling on whatever happens to coincide with their ideology, while zealous left-wing lawyers try to hold Trump to standards any other Presidential candidate would find obvious. But what takes up the main article below the top picture is the reversal of the Weinstein conviction, a surprise to all but court watchers and lawyers. The reversal by an Appeals Court consisting mostly of women justices highlights the issue plaguing feminists and the me-too attitude. In a liberal capitalistic society, individualism is the order of the day, and there can be no real and sustainable equality if women accept inferiority in physical fighting ability, since this ability manifests a key aspect of the individual’s redoubtable potency. A cohesive cultured society could of course adopt a standard that rectifies the historical dominance of men over women and the consequent misogyny, but in America no such standard is likely. Women must gain equality by standing as individuals and use the virality of role-modelling rather than assuming a collective perspective. Men and women alike simply won’t agree to standards that create new and vague legal rights for women even when those standards are clearly intended to rectify injustice. The culture wars can only deepen as lawyers try to standardize feminism and that counterproductively helps the conservatives, particularly in an aging society.
The bears were running strong by highlighting the myriad such divisions in America, and continue to accurately characterize the nation as too divided to be fundamentally sound. But the bulls have managed again to squeeze the shorts and are now running wild over earnings reports from the few power megacaps left on the roster. I believe the bears will regain control by the close or severely curtain the rally, 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.
Inflation Expectations: Investors expect rising inflation over the coming years, implying higher interest rates to come, potentially bearish for equities.
Long-Term Treasury Rates: Long rates are rising and that will reduce the attraction of equities while cooling the housing and auto industries to the detriment of economic growth.
Economic Data: The latest economic data regarding inflation and inflation expectations are worse than expected, a negative sign for equities.
Liquidity Metrics: Measures of money flow across the globe are trending downwards lately, which hurts equities.
Geopolitical Issues: Developments around Eurasia are a clear negative for equities.
The correction isn’t over but will probably see many more bounces, as there remain many positives besides a few earnings reports to gird the bulls. These include:
Shanghai Composite Technicals: Chinese equities are trading well and that bodes well for the global 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.
This morning I added my position in the inverse levered ETF SPXU, consequently my current positions include 3M (MMM), Pfizer (PFE), and a larger but still moderate position in SPXU, which nets out to a moderate short position in equities.