Tuesday, February 16, 2021

Market -- About An Hour Before The Close -- February 16, 2021

Before we get started, New York governor Cuomo under a lot of fire for his handling of the Covid-19 pandemic in his state, his grandstanding, and accusations of outright lies, how does Cuomo get out of this? My hunch: he doesn't do a thing. It is what it is and the story will gradually burn itself out. However, having said that, some might argue, especially "Broadway" and the restaurants in NYC, will pressure him to "open up The City. Cuomo needs friends fast and this might be one way to do that. If NYC "opens," that sends a huge message to the rest of the country. 

Pardon the interruption. Now back to the market.

If Dow stays where it is right now, it would close at a new all-time high.

First group:

Second group:

  • 30-Year Treasury: link here. History.  2.084% --52-week high, and quite a steep jump;

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.  

Bonds: a reader mentioned the "bond story" to me today. See above; bond rates increasing. My not-ready-for-prime-time reply:

Ten-year Treasury at nearly 1.3% at a 48-week high --

In February, 2020, a high of nearly 1.5%, but after the high of 1.27% in March, it was lower for the rest of year until today.

Right now it looks like the bond yield will pull non-bond equity shares down, but the tailwinds for higher equity prices remain:
  • stimulus / stimulus checks / infrastructure bill (two different things)
  • FOMO -- fear of missing out by new traders
  • YOLO -- you only live once by new traders
  • pent-up demand as Covid scare quiets a bit
  • GDP of 7% this year
  • better earnings by end of the year
Oh, and I read a story (Bank of America?) high-value investors are moving cash into the market; apparently cash in their accounts in last couple of weeks at near all-time low. I wish I would have caught the link. (See below.)

I don't trade in bonds so I won't participate in any gains there.

I think the three major indices are near all-time highs. They may have had intra-day highs before dropping back.

It certainly seems to be a stock-picking market now.

I found the study I was looking for: link here, Bloomberg via Yahoo!Finance. Archived. From the linked article:

Bank of America Corp. clients with $614 billion combined are in the throes of an unprecedented frenzy of risk-taking, as more Wall Street banks sound the alarm on greed across markets. [Think: FOMO, YOLO]

After a week which recorded the strongest-ever inflow into stocks, a record net 25% of investors surveyed by the investment bank this month are taking higher-than-normal risks. Cash levels slumped to the lowest since 2013, while optimism on cyclical risk assets rose to the highest since 2011. [They will pull this money out in a New York minute if things start to go sour.]

All this is being fueled by unprecedented optimism on the growth outlook, with 84% of fund managers expecting global corporate profits to improve over the next 12 months. 
For the first time in a year, investors say companies should focus on spending rather than improving their balance sheets.

As a JPMorgan Chase & Co. gauge of cross-asset complacency, including valuations, positioning and price momentum, hits the highest in two decades, BofA clients aren’t concerned about market exuberance.

Just 13% of these BofA clients] say that U.S. stocks are in a bubble, while 53% see a late-stage bull market.

With a bond “tantrum” dubbed the second tail risk after the vaccine rollout, bond allocations dropped 3 percentage points to a 62% underweight -- the lowest since March 2018.

Nearly a year after the Covid-19 crisis fueled an unprecedented rout in global markets, stimulus measures and vaccination efforts are pushing investors into reflation trades of all stripes. But after a record flood of money into equity funds, BofA strategists have warned that such exuberance may precede a correction.

Other highlights of the Feb. 5 to 11 survey:

  • Cyclical rotation paused in February, with investors boosting equity exposure to tech, healthcare and consumer staples versus January (as I noted above, a sotck-picking market now]
  • Exposure to commodities and equities is at decade-highs
  • Long tech stocks retook its top spot as the world’s most-crowded trade, followed by long Bitcoin, short U.S. dollar and long ESG
  • Allocation to U.S. stocks increased 5 percentage points to net 9% overweight 
  • Exposure to euro-area stocks dropped 9 points to net 20% overweight 
  • Allocation to EM equities dropped 5 points to net 57% overweight, remaining the most-preferred  region 
  • Exposure to U.K. equities increased 5 points to 10% underweight, remaining the top regional underweight.

Full article above, will be removed and archived later. Archived.

Texas: the "state" is now "looking at" ERCOT to see they screwed this up so badly. I don't think it will take a lot of brain power to figure it out.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)