Another record high for equities looks like a high order for Tuesday, with futures contracts trending lower towards stimulus heaps and rising oil prices, which caused stocks to climb to start the week.
While the momentum has slowed down a bit, this largely unstoppable market generally leaves little in the way of new highs. So, a break that refreshes?
As for the stock market, we can call of the day of global stock strategist Andrew Garthwaite and a team from Credit Suisse, presents a shortlist of red and yellow flags.
‘We remained overweight shares due to high ERP policy [equity risk premium], the start of a bond-for-stock switch and large excess liquidity, while tactical indicators are not yet sending a sell signal, “the strategists say.
For example, they are currently not too concerned about the “exuberance” of the market because they say retail flows have been dampened and there are few systemic risks or sell signals from other indicators.
As for their concerns:
-
Disappointing growth in Europe – medium risk and rising. A slow-moving COVID-19 vaccination and plans for vaccination and fiscal policies that seem less generous than the first time are worrying. Unlike in the US, banks in Europe are currently doing corporate lending and bankruptcies are being suppressed by moratoriums. ‘We see this as a European, not global, stock problem with European GDP [gross domestic product] c.16% of global GDP – although a tactically stronger dollar could be the result, ‘says the team.
-
Less dull Federal Reserve – high risk in the second half of 2021. This is amid the potential for stronger US growth amid easing fiscal policy, pent-up pandemic demand and economic reopening. “If it happens at a time when inflation is rising to 2.5%, wage growth is higher than expected and there are concerns about the bubble of assets, the Fed could become less devilish,” Garthwaite and the team say. Also look at the returns of the treasury year TMUBMUSD10Y,
1.155%
according to 1.7% or sharply rising returns of the TIPS (inflation-protected effects of the treasury). -
China slowdown – low to medium risk. Recent policy tightening is nothing to work on, but China’s current account could weaken more as the world economy reopens. Keep an eye on the housing market indicators, some of which point to a sharp slowdown. If that happens, excessive leverage will begin to unravel, says Credit Suisse.
Elsewhere: ‘We see the possibility that vaccines do not work against mutations, a low risk, especially since changes can be rolled out within 3-6 months. “Other low-risk events include fiscal stalemate in the US Senate and policy errors (with the exception of British fiscal policy and French settlement, which we consider a higher risk),” the team said.
Read: The stock market reflects 2009-10 – and that means a downturn may be near, analysts warn
The markets
Equity futures contract ES00,
YM00,
NQ00,
is modestly lower, with the European shares SXXP,
in the red. Asian markets climbed to Wall Street’s record session. Brent oil BRNJ21,
is picking up fresh highs of more than $ 61 a barrel.
Bitcoin BTCUSD,
just kept climbing and at one point tapped $ 48,000, after electric car maker Tesla TSLA,
unveiled a $ 1.5 billion investment in the cryptocurrency, indicating that it will accept bitcoin as future payments.
The tweet
Meanwhile, Tesla has apparently not been so generous with pension plans for employees.
The buzz
Canadian cannabis company Canopy CGC,
reported a wider loss than expected, but estimates of earnings and equities are rising. Materials and chemicals giant DuPont DD,
reported profit and sales. Social media messaging service Twitter TWTR,
(see preview) and the technology conglomerate Cisco CSCO,
will report after the report.
Democrats on Monday announced their plan to get more stimulus money to families, raising the current $ 1,000 child tax credit for a year to $ 3,000 and slightly higher for families with smaller children.
The parents of a Robinhood trader who died by suicide when faced with a major negative balance have sued the online broker for the unlawful death.
A confidence index for small businesses shows that optimism is the lowest since the onset of the pandemic last spring. Jobs are also ahead.
The World Health Organization says COVID-19 probably jumped from an animal to a human and not from a Chinese laboratory.
Former President Donald Trump’s indictment begins Tuesday.
Random reading
Free ice cream and Russian COVID-19 vaccines? Another “The Simpsons” prediction comes true.
A Redditor asks how everyone is doing with pandemic depression, burnout and fatigue; he gets more than 3000 mostly miserable answers.
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