Good Night Everyone 👋
To my fellow night owls out there, I salute you!
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💥 Today’s price action continued yesterday’s momentum with the SP500 and Nasdaq both reaching all time highs. Consumer reports continue to show a bit of a slowdown in business sentiment/production with the Richmond Manufacturing Index coming in softer than expected. Regardless, consumption in the US just continues to grow. Both Existing Home Sales and New Homes Sales grew higher than expected signaling that the Real Estate market is still running hot! To add to this, the FDA just approved the full Pfizer-BioNTech vaccine, which markets are cheering and China got a 0% infection rate reported over the weekend, giving some hopes that the Delta Variant might be finally slowing down (recall China is ahead of the curve in the infection rate).
Lastly, an offshore oil platform off the gulf of Mexico exploded on Sunday, reportedly cutting down production by 440,000 bpd. Pemex (Mexico’s state run oil company) stated that due to the lack of natural gas to re-inject into crude fields, production will be slashed entirely. Crude oil has rallied almost 10% since Monday’s pre market.
🌐 Cryptocurrency markets continue to slow down in volume but prices are holding nicely after the weekend rally. Bitcoin crossed 50K and Ethereum crossed 3.3k for the first time since May and both sitting handsomely just a few points below. Ethereum’s Hardfork just a few weeks ago coupled with Cardano’s announcement to upgrade to Smart Contracts are allowing cryptos to improve their tech/functionality, paving the way for increased adoption. The total crypto market cap now sits above $2 Trillion with Defi and Stablecoins as the leaders in market share.
Tale of the Tape
As of 08/24/21 close.
U.S Markets
📈 Markets, Rates and Volatility (VIX) 2nd consecutive day rallying with markets today cheering on China’s recovery, US consumer spending, FDA approval on the vaccine and just an overall appetite for equities across the board. Both sides of the market (growth and value) have been rallying with Energy leading value and Consumer discretionary leading growth. . Rising covid cases in the US seem to be ignored at the moment but as they continue to grow globally, if any mobility restrictions were imposed, we will probably see less gasoline demand and overall consumption will take a big hit, potentially reverting all these gains. Rates are still in range but well above the 1.2% low faced just Thursday last week. Volatility (VIX) chilled back to the 17 spot after the back to back rallies in the market this week but it held well into the close so we will have to see tomorrow. Recall that for newer highs, volatility is both your friend and enemy. See how we are in the 17’s again (where we were just a couple weeks ago) but touching newer highs 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 08/24/21:
Inflation Sentiment: Jackson Hole on Friday should provide more commentary around inflation.
Delta Variant Strain: 0% infection rate in China and a FDA approval of Pfizer in the US are showing signs of optimism.
Job Market Recovery: Jobless claims at 17-month low (345k), reflecting some optimism around jobs growth. Still 10 million jobs open. Next job reports are going to be extremely important.
Fed Tapering: Most market participants anticipate November or December as the months of choice to start, but it can be announced as early as September. Jackson Hole will potentially provide some insight into this.
Check the Full U.S Economic Calendar (Here).
Earnings Today
💻 Palo Alto Networks Easily one of the most misunderstood stocks in the market right now, the cybersecurity company reported a stellar Q2 with revenue growing a whooping 25% year over year. Most importantly, the company announced no more acquisitions for the time being which put investors in a good mood. For reference, Palo Alto Networks has acquired a company every quarter for almost the last 4 years. See more details (Here).
🔌 Best Buy American Electronics wholesaler announced earnings that blew analysts expectations out of the water. Analysts were concerned that the retailer had a temporary surge due to the rush to work from home by the entire nation during lockdown. Regardless, Best Buy proved that even with reopening, the consumer has maybe changed forever and home offices will continue to be a necessity rather than a commodity. More details (Here).
Check the Full U.S Earnings Calendar (Here).
Corporate News
🔞 Meme Stocks strike back! Who’s at it again? Well, its meme stocks. What is a bubble without these stocks surging like crazy from now and then. A video game retailer, a movie theater, an old phone manufacturer and freaking Koss all at it again. Short interest has been increasing in these stocks recently and now it seems like traders are scheming another short trap. will we see another squeeze? More details from (Reuters).
🏦 Citi x Bitcoin Trading US Bank Giant reported on Tuesday that it is currently awaiting regulatory approval to trade Bitcoin futures and then exchange-traded notes via CME. Citi joins Goldman Sachs in offering cryptocurrency exposure to their clients as institutional adoption continues to grow across the board. More details (Here).
👾 Visa buys 150k NFT the payment giant reported early Tuesday that it has purchased a part of the crypto-punk collection, specifically Crypto-Punk #7610 for about 50 Ethereum or 150,000 USD. What is going on with these markets, smh! More details (Here).
Meme Headlines
Disclaimer: I am not a financial advisor. This is not a recommendation to buy or sell any security. When investing, always do your own research and asses your own risk.