Morning Notes – 3/24/2022

Good Morning:

• It wasn’t a bad morning until I read that the Bidenista sanctions are out to mess with my morning coffee. “Mega Emergency” Unfolds For World’s Top Coffee Growers As Fertilizer Costs Spike.
• Did you know that coffee changed the world? See “Coffee and the Enlightenment.“
• I rarely get out from behind my computers, so gas prices at $6 a gallon haven’t bothered me much. But messing with my coffee forces me to rely on our algorithms almost exclusively. I often get up at 2:00 am, for heaven’s sake!
• The housing market announced yesterday that it might be leaving the party early with sales down and mortgage rates up. Time to sell, wait to buy?
• The S&P 500 tagged my 5-day line entry point overnight. Unfortunately, I was asleep, and I don’t do my best trading when I am unconscious, so I missed the long entry. I am still looking for one more loop higher.
• As previously noted, the next few days will have little to do with fundamentals. Month and quarter-end are approaching. Month ends tend to have markups, and quarter ends have rebalancing. This quarter comes with the added twist: bonds got smashed this quarter. Now stocks have recovered somewhat.
• Before stocks recovered, I thought the balanced funds would be adding to stocks. Now it is the reverse.
• Many funds have relative weighting mandates between bonds and stocks – these funds must add to their bond balances.
• How does this rebalance affect quarter-end?
• In this quarter, we saw massive growth takedowns, ramps in inflation, rate hike expectations, a war in Europe with enormous implications for commodities, particularly energy, and sanctions that could starve millions in the weeks ahead. 
• The net result: the S&P 500 index is down a mere 6% from all-time highs and back to 187% of GDP.
• And that tremendous monetary tightening? China has put a floor under its stock market and is intervening. The Fed’s balance sheet just made a new all-time high last week. And the European Central Bank keeps printing every week with no signs of stopping: