Hey everyone, with a nice long Holiday weekend here in the US markets will have an extra day to ponder the large run up we’ve experience in the month February and where we go from here. Get my take on the current status of price action in this week’s round-up.
WEEKLY SOUND BITES:
• Major indexes notched a 2nd week of gains and reached record highs, seemingly helped by the accelerating rollout of coronavirus vaccines and declining case trends…Mid- and small-caps built on their substantial year-to-date lead over large-cap stocks, and value shares also outperformed… The week brought the last major wave of fourth-quarter earnings reports, with 82 of the S&P 500 companies reporting…overall earnings for the S&P to have grown slightly on a year-over-year basis, marking an exceptionally quick earnings recovery compared with past recessions—following the global financial crisis in 2008–2009…Roughly 80% of companies in the index have topped earnings estimates to date, well above typical quarters…global equity funds saw a record inflow of $58B this past week…
• Many fixed income investors closely watched the week’s CPI data for confirmation that inflation was beginning to accelerate…The downside surprise helped push down Treasury yields at midweek, but yields increased again Friday, perhaps lifted by President Joe Biden’s announcement Thursday evening that the U.S. had secured 200 million more doses of coronavirus vaccines…Core (excluding food and energy) consumer price index (CPI) remained unchanged in January, below consensus estimates of an increase of 0.2% while Weekly jobless claims fell to 793,000…and the gauge of consumer sentiment in February missed on the downside when it was released Friday. If confirmed, it would be the lowest reading (76.2) since August…
• Fed Chair Jerome “Power Ranger Boom Boom” Powell indicating this past week that he intends to maintain interest rates near zero and continue with USD 120 billion in monthly asset purchases…Many argue that very low interest rates justify higher equity valuations because of the lower discount they place on future earnings while lower bond yields also support the relative appeal of equities…and after adjusting for inflation, real interest rates now are negative helping push more money into Equities…
• European equity markets were volatile but ended generally higher. Improving coronavirus infection rates, the rollout of vaccination campaigns, and hopes of a large U.S. economic stimulus supported equity markets…The EC forecast that the eurozone economy will grow 3.8% this year and next year…meanwhile, the UK economy contracted 9.9% in 2020—the most since 1709—according to the Office for National Statistics…The BOE’s outlook calls for a sharp economic contraction in the first quarter of 2021 because of continuing lockdown restrictions, followed by a sharp recovery around midyear due to a quick rollout of the national vaccination campaign.
• Chinese markets rallied ahead of the Lunar New Year holiday… Most markets across Asia were closed on Friday for the weeklong holiday that kicked off February 12…The car industry remained a bright spot in China’s economic recovery. Vehicle sales climbed 30% in January, the tenth straight monthly increase…
Enjoy our Weekly Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
