𝗧𝗵𝗶𝘀 𝘄𝗲𝗲𝗸 𝗲𝗾𝘂𝗶𝘁𝗶𝗲𝘀 𝗴𝗲𝗻𝗲𝗿𝗮𝗹𝗹𝘆 𝗸𝗲𝗽𝘁 𝘁𝗵𝗲𝗶𝗿 𝘄𝗶𝗻𝗻𝗶𝗻𝗴 𝘀𝘁𝗿𝗲𝗮𝗸, 𝗮𝗹𝘁𝗵𝗼𝘂𝗴𝗵 𝘁𝗵𝗲 𝗴𝗮𝗶𝗻𝘀 𝘄𝗲𝗿𝗲 𝗻𝗼𝘁 𝗮𝘀 𝗶𝗺𝗽𝗿𝗲𝘀𝘀𝗶𝘃𝗲 𝗮𝘀 𝘁𝗵𝗲 𝘄𝗲𝗲𝗸 𝗯𝗲𝗳𝗼𝗿𝗲. 𝗬𝗶𝗲𝗹𝗱 𝗰𝘂𝗿𝘃𝗲 𝗶𝗻 𝗨𝗦 𝘄𝗶𝗱𝗲𝗻𝗲𝗱 𝗮𝗴𝗮𝗶𝗻 𝗮𝗻𝗱 𝗶 𝘁𝗵𝗶𝗻𝗸 𝗶𝘁 𝗻𝗲𝗲𝗱𝘀 𝘁𝗼 𝗯𝗲 𝗰𝗹𝗼𝘀𝗲𝗹𝘆 𝘄𝗮𝘁𝗰𝗵𝗲𝗱 𝗴𝗼𝗶𝗻𝗴 𝗳𝗼𝗿𝘄𝗮𝗿𝗱. 𝗡𝗶𝗸𝗸𝗲𝗶𝟮𝟮𝟱 𝗶𝗻𝗱𝗲𝘅 𝘄𝗮𝘀 𝘁𝗵𝗲 𝗺𝗮𝗷𝗼𝗿 𝘄𝗶𝗻𝗻𝗲𝗿, 𝘄𝗵𝗶𝗹𝘀𝘁 𝗘𝗨 𝗮𝗻𝗱 𝗨𝗦 𝗲𝗾𝘂𝗶𝘁𝗶𝗲𝘀 𝘄𝗲𝗿𝗲 𝘂𝗽 𝟬-𝟭,𝟱%.
What’s notable is the YTD performance of US small caps as well. Russell2000 ($IWO) is up 15% from the start of 2021, whilst $SPX500 added slighlty over 4%. This is a clearly cyclical behaviour, as investors rush into smaller companies, which are much more sensitive to the dynamics of general macroeconomic conditions, which have been clearly improving of late.
𝗟𝗮𝘀𝘁 𝘄𝗲𝗲𝗸
👉 Monday kicked off pretty strong, ending higher for a 6th day in a row (longest streak since August). Companies from the energy space led the gains ( $CVX (Chevron) , $MRO (Marathon Oil Corp) , $OXY (Occidental Petroleum Corp) ).
👉 A milestone happened for $BTC the same day, as Elon Musk announced $TSLA (Tesla Motors, Inc.) bought USD1,5bn worth of the cryptocurrency to start accepting it a means of payments.
👉 Treasury yields climbed higher with the 30-yr yield briefly hitting 2%. Most agree that yields have a way to go before they threaten stocks, but I think they need to be watched very closely. It will be a matter of the dynamics of the move rather the scope.
👉 On Tuesday $BAC (Bank of America Corp) announced they expect a 5-10% correction in 1Q21 as the positioning is exuberant, equity supply is at records and earnings revisions are “as good as it gets”. The banks year-end $SPX500 target is 3800pts. Equities took a pause.
👉 The Fed Chair J.Powell sent, as expected, dovish signals to the markets on Wednesday. Speaking at The Economic Club of New York he stated that 𝙩𝙝𝙚 𝙧𝙖𝙩𝙚𝙨 𝙣𝙚𝙚𝙙 𝙩𝙤 𝙨𝙩𝙖𝙮 𝙡𝙤𝙬 𝙛𝙤𝙧 𝙡𝙤𝙣𝙜𝙚𝙧, 𝙙𝙚𝙨𝙥𝙞𝙩𝙚 𝙩𝙝𝙚 𝙫𝙞𝙗𝙧𝙖𝙣𝙩 𝙧𝙚𝙫𝙞𝙫𝙖𝙡 𝙞𝙣 𝙩𝙝𝙚 𝙚𝙘𝙤𝙣𝙤𝙢𝙮, 𝙖𝙨 𝙩𝙝𝙚 𝙡𝙖𝙗𝙤𝙧 𝙢𝙖𝙧𝙠𝙚𝙩 𝙞𝙨 𝙨𝙩𝙞𝙡𝙡 𝙛𝙖𝙧 𝙛𝙧𝙤𝙢 𝙨𝙩𝙧𝙤𝙣𝙜. 𝙏𝙝𝙚 𝙜𝙤𝙤𝙙 𝙤𝙡𝙙 𝙧𝙪𝙡𝙚 𝙄 𝙖𝙡𝙬𝙖𝙮𝙨 𝙪𝙣𝙙𝙚𝙧𝙡𝙞𝙣𝙚 𝙞𝙨: “𝘿𝙤𝙣’𝙩 𝙛𝙞𝙜𝙝𝙩 𝙩𝙝𝙚 𝙁𝙚𝙙”.
👉 Stocks still paused on Thursday, dented a bit by a relatively weak weekly jobless claims (793k).
👉 Friday was mostly treading water as well. What needs to be noted is the energy sector’s performace last week. $XOP and $XLE both finished sharply higher (+8% and +5% respectively).
👉 𝙀𝙛𝙛𝙚𝙘𝙩𝙞𝙫𝙚 𝙬𝙚𝙚𝙠𝙡𝙮 𝙞𝙣𝙙𝙚𝙭 𝙘𝙝𝙖𝙣𝙜𝙚𝙨: $SPX500 +1,2%, $NSDQ100 +1,5%, EuroStoxx600 +1,1%, $GER30 +0%, $JPN225 +4,2%.
𝗢𝘁𝗵𝗲𝗿 𝗺𝗮𝗿𝗸𝗲𝘁𝘀 𝗲𝘃𝗲𝗻𝘁𝘀:
👉 𝘽𝙤𝙣𝙙𝙨: yield curves steepened across the globe. the US yield curve (10y-FF) is wider again at 120bps, the German curve (10Y Bunds-3M) at 18bps. EuroArea AAA-rated bonds yield curve at 16bps. High Yield Spreads at 3,5.
👉 𝘾𝙤𝙢𝙢𝙤𝙙𝙞𝙩𝙞𝙚𝙨 (𝙚𝙭 𝙤𝙞𝙡): $GOLD +0,5%, $SILVER +1,5% on week.
👉 𝙊𝙞𝙡: +4,6% on week. $OIL keep grinding higher.
👉 𝘾𝙪𝙧𝙧𝙚𝙣𝙘𝙞𝙚𝙨: DXY (Dollar Index) -1,2% on week, $EURUSD +0,6%.
Best, GlobalAlphaSearch.com
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