A modest recovery appears to be underway after Monday’s setback, as hope is eternal for new stimulus from President Joe Biden’s government. And why should the market stop doing what it has been doing for a long time now? Bounce back again and again.
But are there problems in paradise? “The ability of the stock market to decisively compare with the tragic events at the Capitol at 1/6, the increase in the virus, a weak employment report and rising returns confirm that a new, more speculative, more volatile phase of the bull market has started, ”says BTIG chief equity and derivatives strategist Julian Emanuel and co-equity strategist Michael Chu in a note.
“Such a phase lasted 6+ months in 1999-2000, as the S&P 500 advanced a further 25%, with intermediate sales of 15%. The depth of such withdrawals in 2021 largely depends on returns, ”they say. And if yields continue to rise, like Monday, then high-growth names could be in trouble, they say.
They also offer us call of the dayand according to one sector, investors may want to step forward.
Last month, they warned that higher and higher rates, communications and media stocks could be jeopardized due to an increase in regulatory investigations and a world depleted by years of excessive consumption.
Emanuel and Chu updated these thoughts on Tuesday: ‘President Trump’s departure is likely to dampen media appetite, as well as the reopening of the economy and the eventual return of travel and’ away from the screen ‘leisure activities. “This and recent steps to restrict access to content providers and platforms by Alphabet GOOGL,
Apple AAPL,
Facebook FB,
and Twitter TWTR,
may only inspire politicians to seek more oversight over them.
Then there is the issue of investors moving to value and away from growth stocks, which will rely on the communications sector.
Here is their list of S&P 1500 Communications Services stocks that have outperformed their broader index since the end of 2019, but are going to move from “leaders to backward” as politicians pay more attention to media, while the rest of us pay less attention. “
Among the above stocks are Facebook, Disney DIS,
Netflix NFLX,
the New York Times NYT,
and the publisher of MarketWatch, which publishes this report, News Corp NWSA,
NWS,
Last word is to Howard Marks, co-founder and co-chair of Oaktree Capital Management. He explains in detail in his latest newsletter how investors may not see the strategy for growth versus value.
“Some of today’s high valuations are likely to be more than justified by future prospects, while others are ridiculous – just as some low-valuation companies may be facing a looming downturn, while others are only momentarily disadvantaged,” he says. Read more here.
The markets
US futures contracts ES00,
YM00,
NQ00,
is modestly higher, but the European shares SXXP,
down as concerns about the COVID-19 infection increase. Asian stocks ended higher. The yield on the 10-year treasury note TMUBMUSD10Y,
continues to climb higher after the biggest weekly rise since June last week.
Bitcoin BTCUSD,
volatility continues, with the cryptocurrency rising 8% after tumbling between Sunday and Monday.
The buzz
U.S. sentiment for small businesses fell to a seven-month low in December. The results of the job surveys and the turnover of labor are also available.
German lender Deutsche Bank DB,
allegedly suspended transactions with President Donald Trump and the New York Signature Bank SBNY,
asks that he resign, after also saying he will no longer do business with him after the riots on Capitol Hill last week. Trump tried to blame the attacks on “Antifa people” last week, Axios reported, citing a tense phone call between him and House Minority Leader Kevin McCarthy, who replied that no, it was “MAGA. I know. “I was there.”
Shares of Zoom Video ZM,
is down after the communications technology company said it was selling $ 1.5 billion in stock.
Network management software group SolarWinds SWI,
says it has found the source of recent cyberattacks.
Some Democratic lawmakers say they tested positive for COVID-19 while hiding from colleagues who refused to wear face masks during the Capitol Hill riots last week.
Retailer Walmart WMT,
will start its own financial technology business for customers and employees with support for the investment platform Robinhood.
The graph
Here’s a look at how COVID-19 is progressing in the US, with deaths and cases beyond their peak.
Random reading
I’m spying. Angelina Jolie is more than an actress?