Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Just In Case

By MarketPulse (Jeffrey Halley)Market OverviewApr 27, 2021 05:02AM ET
www.investing.com/analysis/just-in-case-200575550
Just In Case
By MarketPulse (Jeffrey Halley)   |  Apr 27, 2021 05:02AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The buy everything gnomes were out in force with US stocks markets closing at or near record highs yesterday, despite Durable Goods missing. The main culprit was transport, with the automotive sector’s chip-shortage woes appearing in the numbers. Financial markets, though, quickly put it behind them as transitory.

With US yields remaining benign, the US 10-year comfortably nestled in its 1.55% happy place; there was no reason not to keep buying equities. The heavyweight earnings calendar this week expected to reaffirm that the US recovery, and parts elsewhere, is solidly on track. Notably, the US dollar crept higher, and I suspect that the reason is the FOMC rate decision. Nobody really believes that the Fed will change its forward guidance, but “just in case”, investors appear to be loading up on the US dollar as a hedge. The greenback is likely to resume its gentle retreat if the FOMC passes without incident.

US GDP is looming on the horizon this week as well, with plenty of pundits suggesting that an annualised 7.0% growth rate isn’t out of the question. I’ll not disagree with that premise, but I am struggling to see how US 10-years can stay anchored around 1.55% in that scenario. For now, the market is telling me I am wrong, and the market is always correct until it changes its mind and decides it isn’t. King Canute, I am not, although sometimes I do feel like an island.

Germany’s IFO rose, shrugging off vaccine concerns. That is in line with the solidity of last week’s pan-Europe PMI data, and Europe has become the street’s favourite cyclical recovery place. With 25% of Europeans now jabbed and its vaccination programme set to accelerate in the next two months, the premise has merit. Only a sudden steepening of the US yield curve will likely knock that off track.

South Korean Adv GDP for Q1 QoQ outperformed this morning, rising by 1.60%. It gives markets more evidence that the global recovery is on track, even if it will be a K-shaped one with a capital K. Electronics, unsurprisingly, led the way, but evidence of increased activity was noted across most sectors, including domestic consumption.

China Industrial Profits for March rose 92.30% YoY. Although the baseline effects of last year’s Covid-19 lockdowns flatter the headline, the data reinforces that the factory of the world’s growth remains steadfast. With some economics saying that the pace of recovery is slowing behind the headline data, that underlying premise will receive a more vigorous examination from the official PMI data released on Friday.

The tragic Covid-19 situation in India is world news, and rightly so. However, data emerging suggests that new cases are peaking in Mumbai and New Delhi. Both the Indian rupee and Indian equities have made recoveries over the past two sessions, and one expects this news to account for much of those gains. Although the Indian situation remains dire, the nascent recovery by local financial markets is a reminder that a seemingly bottomless ocean of investor money is looking for a home in a zero per cent world. Only a rapidly steepening US yield curve will upset the buy-the-dip applecart that has served the world so well over the past year.

US earnings session hits top gear today, with a who’s who of corporate heavyweights announcing Q1 results. Most attention, though with be on the technology titans Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL). Apart from the headline numbers, which should be spectacular, most attention will be focused on their growth outlooks and whether those expectations are reined in as the world reopens in key economies. With such rich valuations, any revised downward guidance will likely be punished by investors. For the same reason, earnings at or near expectations will probably be punished as well but do remember what I said about buying the dip.

Turning to cryptos, one of the world’s largest bitcoin traders, Tesla (NASDAQ:TSLA), announced quarterly earnings yesterday. Its share price fell yesterday in a classic “buy the rumour, sell the fact” scenario, something big-tech may also face this week. It made its usual money from selling environmental credits and sold some electric cars, charged by clean electricity produced in coal-fuelled power stations. Notably, it booked over USD100 million on Bitcoin, and its CFO reiterated their faith in the crypto (he/she had 100 million reasons to, I guess) That was enough to turbo-charge bitcoin’s rally yesterday, the “mainstream asset” finishing 5.30% higher at USD53,250.00 of US fiat currency back by US taxpayer revenues.

As I had pondered, Tesla’s CFO had indeed tweeted something that had sparked the recovery. Mr Musk tweeted, “What does the future hold?” I have not had a chance to consult with my millennial daughters, but apparently, that means buying as much of every crypto as you can, as quickly as you can. The market has answered the call, of course. For my part, the bitcoin chart shows that bitcoin had fallen out of a rising wedge at USD56,000.00; despite the noise, the technical target remains USD42,000.00 or thereabouts. The wedge base is at USD58,000.00 today, so a daily close above there will tell me I am wrong, although it will be behind a long queue of crypto believers.

Finally, the Bank of Japan announced its latest policy decision just now. In an 8-1 decision, the Board held its policy rate unchanged at -0/10%, with no change to its yield curve control programme, entirely as expected. GDP forecasts rose ever so slightly to 4.0% for 2021, although Core CPI guidance was revised downwards to 0.10% from 0.50%. BOJ President Kuroda said the 2.0% inflation target would not be achieved during his term. The quarterly report forecast only a moderate recovery. Combined with the Covid-19 states of emergency around the country, Japanese investors have given the uninspiring quarterly report and comments a thumbs down, with Japanese equities retreating.

Original Post

Just In Case
 

Related Articles

Kenny Fisher
Pre-FOMC Shuffling By Kenny Fisher - Jun 15, 2021 1

Some pre-FOMC position shuffling is occurring across asset classes at the moment. Equities continue on their merry way higher, with the S&P 500 and NASDAQ tracing new record...

Just In Case

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email