Good Afternoon Team
Thank you for reading, hopefully this is helpful. I’m working on revamping the format of the Newsletter again, send your suggestions!
Good day in the markets today with major indexes holding the line just a few % points away from hitting all time highs (SP500, Nasdaq). The day was packed with economic data points on Core Durable goods, Q1 GDP and even some PCE price inflation numbers, which is for now sending rates (and thus inflation sentiment) higher. Cryptomarkets continue to form a base and trading sideways following the rough decline earlier in the month and then the rebound. It almost looks as if the money was moved to growth stocks now, which are seeing heavy bidding.
Headlines
⚖️ Republican Infrastructure Counter Senator republicans unveiled an Infrastructure plan counter-offer to the Democrats and the White House worth now $929B, which is now igniting talks between parties. President Biden promised to work on a plan to renovate the country’s roads, bridges and even broadband systems to catch up with the lack of spending in the recent years. More details (Here).
👾 Meme Stocks II Day 2 of meme stock bonanza as AMC climbed a crazy 40% today after its short interest % increased over the past few months. Legacy gaming store GameStop and movie theatre AMC have been a representation of stock market “gambling” amid the markets after just a few months were they hit all time highs and leaving multiple Short-sellers out of business. How long will the bonanza continue, place your bets…
Without further delay, the tale of the tape:
Tale of the Tape
As of 5/27/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) All major indexes were higher today (except Nasdaq by about 1bps) with outperformance coming from a tilt in growth small/mid caps in the Comm. Services and Discretionary sectors + favorable outcomes for the energy sector which are sending markets in an optimistic rush. The Russell 2000 is now taking the lead in this market showing the most relative strength (R/S) against the broader market as small/mid caps change course following many months of downtrend. Rates went up by about 3bps to 1.61% as hot economic activity signs continue to pile up. Volatility (VIX) to a level of 16.5ish, marking a downtrend that is sending a calm tone to the markets but still failing to retest those lows of 15.5 for now.
Here’s a look on every sector in the S&P500 from SPDR.
⚠️ The Wall of Worry In this fast paced market, it is key to note the themes that seem to be impacting stock market performance so that we keep track of its progress and can inform ourselves to tactically adjust. In my opinion, these are the most important issues that are keeping volatility and market rotations in place.
Updates as of 05/27/21:
Inflation transitory vs permanent: Durable Goods, GDP and some inflation data points appeared to be in-line with consensus today so nothing fancy, we continue to monitor if transitory/permanent.
Fed Tapering: No further updates.
Peak Growth & Asset Prices: Peak growth is again in the spotlight as we are seeing the consumer and now housing start to slowdown, although not enough to know if this is the peak or not yet.
Higher Taxes: No further updates from last time.
Job Market Recovery: Jobs numbers came better then expected, continuing the healthy job growth trend.
Sell in May and go away: Historically weak seasonality in the month of May is so far proving to be correct. Better seasonality 2H of May and into June.
Earnings Today
👨🏻💻 Salesforce Q1 21 came in better then expected with accelerated revenue fueling profits. The enterprise cloud solutions provider is seeing sustained demand for its product amid a pandemic that is ending hence less people working from home. The reality is that the products are hotter then ever, sending a signal that the demand is to stay. More details (Here).
🍥 Autodesk Q1 earnings beat expectations as the Design/Workflow Tool software company saw increased demand for its services due to the pandemic. Autodesk provided guidance that was slightly below, but investors seemed unbothered as the stock is up afterhours.
Check the Full U.S Earnings Calendar (Here).
Corporate News
🦠 The Covid-19 Mystery President Biden announced he will release a full report on the origins of Covid-19 soon. The report might put skepticism around the virus to sleep so very eager to hear what the White House has to say. Further Details (Here).
Meme Headlines
Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any securities. When investing, always do your own research and asses your own risk.