MarketMinder
Daily Commentary

Providing succinct, entertaining and savvy thinking on global capital markets. Our goal is to provide discerning investors the most essential information and commentary to stay in tune with what's happening in the markets, while providing unique perspectives on essential financial issues. And just as important, Fisher Investments MarketMinder aims to help investors discern between useful information and potentially misleading hype.

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What We're Reading

For the Markets, It’s Not Just the Debt Ceiling

By Jeff Sommer, The New York Times, 5/26/2023

MarketMinder’s View: We more or less agree with the very end of this piece that argues now is a time for patience and diversification for stock investors, although that is pretty evergreen advice. The rest hypes a bunch of either false or old fears markets have long since dealt with, starting with the topic du jour, the debt ceiling. Look, we have beaten you over the head with reasons that the debt ceiling will overwhelmingly likely be lifted, doesn’t really risk default and is vastly overrated as a threat. So is a downgrade. This even overstates the risk of default (which it claims is a sub-5% chance) by citing calculations based on the highly illiquid, thinly traded market for US sovereign credit-default swaps (insurance contracts against bond default). This math doesn’t equal logic, which requires digging into the government’s finances, constitutional requirements and legal precedents, and doing that reveals default risk is microscopic. Even a deal cutting government spending, which it touts as a threat, is overstated, considering the talks surround a freeze at last year’s levels—which are historically quite high. Beyond this, the article rehashes worries over the Fed, Ukraine war and—wait for it—a new COVID strain. Stocks have risen alongside Fed hikes since October—the shock is gone. The other two are so old and so well-known that any impact on efficient, forward-looking markets is nearly non-existent. The environment is not pristine. But the real risks here are less-watched factors, like potential unintended consequences of bank or crypto regulation. Nobody can rule out short-term volatility—a constant in markets. But the ideas touted here look like an array of bricks in the wall of worry stocks ordinarily climb.

Europe’s Natural Gas Prices Set for Longest Weekly Losing Streak in a Decade

By Charles Kennedy, OilPrice.com, 5/26/2023

MarketMinder’s View: European natural gas prices continue to fall from their historic highs. “The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, plunged by 5.7% to $25.75 (24 euros) per megawatt-hour (MWh) as of 12:34. p.m. GMT on Friday. … Prices have now tumbled by 66% since the beginning of this year and by 90% since the August 2022 record-high of over $322 (300 euros) per MWh. Gas prices are now at their lowest since the start of the energy crisis in Europe in the autumn of 2021, ahead of the 2021/2022 winter season, with the crisis reaching a peak later in 2022 after the Russian invasion of Ukraine and the lack of most of Russia’s pipeline gas supply.” Another interesting tidbit shared here: Gas inventories are at their highest for this time of year in at least a decade. Against the backdrop of fear over supplies next winter, which has percolated for months, this should constitute a positive surprise and is tantamount to what Fisher Investments founder and Executive Chairman Ken Fisher calls “anticipation is mitigation” in action. We think Europe’s ability to wean itself off Russian energy much faster than expected should dampen fears that renewed energy pain awaits the Continent later this year. Don’t underestimate people’s ability to adjust and adapt when incentives shift powerfully. For more, see this week’s commentary, “The European Energy Improvements Stocks Anticipated.”

The Stock Market Is Not a Casino

By Ben Carlson, A Wealth of Common Sense, 5/26/2023

MarketMinder’s View: Yes! This post accomplishes two highly sensible things: One, gutting the misguided analogy that compares stock market investing to gambling; two, proving that overseas investing isn’t materially worse or different than US-only. On the former, this shows—using empirical data—that the longer your holding period, the more likely an investor is to reap positive returns. That is the opposite of a casino, where more time spent is generally worse for you (financially, maybe fun accounting is different). All analogies have holes and very often obscure reality. But that is especially true with this one, which is why we agree with the author’s notion that his “least favorite description of the stock market is that it’s just a casino where the house always wins.” As for the rest, it illustrates the fact that global markets tend to move concurrently but with rotations in leadership.

What We're Reading

For the Markets, It’s Not Just the Debt Ceiling

By Jeff Sommer, The New York Times, 5/26/2023

MarketMinder’s View: We more or less agree with the very end of this piece that argues now is a time for patience and diversification for stock investors, although that is pretty evergreen advice. The rest hypes a bunch of either false or old fears markets have long since dealt with, starting with the topic du jour, the debt ceiling. Look, we have beaten you over the head with reasons that the debt ceiling will overwhelmingly likely be lifted, doesn’t really risk default and is vastly overrated as a threat. So is a downgrade. This even overstates the risk of default (which it claims is a sub-5% chance) by citing calculations based on the highly illiquid, thinly traded market for US sovereign credit-default swaps (insurance contracts against bond default). This math doesn’t equal logic, which requires digging into the government’s finances, constitutional requirements and legal precedents, and doing that reveals default risk is microscopic. Even a deal cutting government spending, which it touts as a threat, is overstated, considering the talks surround a freeze at last year’s levels—which are historically quite high. Beyond this, the article rehashes worries over the Fed, Ukraine war and—wait for it—a new COVID strain. Stocks have risen alongside Fed hikes since October—the shock is gone. The other two are so old and so well-known that any impact on efficient, forward-looking markets is nearly non-existent. The environment is not pristine. But the real risks here are less-watched factors, like potential unintended consequences of bank or crypto regulation. Nobody can rule out short-term volatility—a constant in markets. But the ideas touted here look like an array of bricks in the wall of worry stocks ordinarily climb.

Europe’s Natural Gas Prices Set for Longest Weekly Losing Streak in a Decade

By Charles Kennedy, OilPrice.com, 5/26/2023

MarketMinder’s View: European natural gas prices continue to fall from their historic highs. “The front-month futures at the TTF hub, the benchmark for Europe’s gas trading, plunged by 5.7% to $25.75 (24 euros) per megawatt-hour (MWh) as of 12:34. p.m. GMT on Friday. … Prices have now tumbled by 66% since the beginning of this year and by 90% since the August 2022 record-high of over $322 (300 euros) per MWh. Gas prices are now at their lowest since the start of the energy crisis in Europe in the autumn of 2021, ahead of the 2021/2022 winter season, with the crisis reaching a peak later in 2022 after the Russian invasion of Ukraine and the lack of most of Russia’s pipeline gas supply.” Another interesting tidbit shared here: Gas inventories are at their highest for this time of year in at least a decade. Against the backdrop of fear over supplies next winter, which has percolated for months, this should constitute a positive surprise and is tantamount to what Fisher Investments founder and Executive Chairman Ken Fisher calls “anticipation is mitigation” in action. We think Europe’s ability to wean itself off Russian energy much faster than expected should dampen fears that renewed energy pain awaits the Continent later this year. Don’t underestimate people’s ability to adjust and adapt when incentives shift powerfully. For more, see this week’s commentary, “The European Energy Improvements Stocks Anticipated.”

The Stock Market Is Not a Casino

By Ben Carlson, A Wealth of Common Sense, 5/26/2023

MarketMinder’s View: Yes! This post accomplishes two highly sensible things: One, gutting the misguided analogy that compares stock market investing to gambling; two, proving that overseas investing isn’t materially worse or different than US-only. On the former, this shows—using empirical data—that the longer your holding period, the more likely an investor is to reap positive returns. That is the opposite of a casino, where more time spent is generally worse for you (financially, maybe fun accounting is different). All analogies have holes and very often obscure reality. But that is especially true with this one, which is why we agree with the author’s notion that his “least favorite description of the stock market is that it’s just a casino where the house always wins.” As for the rest, it illustrates the fact that global markets tend to move concurrently but with rotations in leadership.