Sep 3, 2021
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Who controls the memes controls the universe.” – Elon Musk
Heading into a weekend where we celebrate the contribution of American workers to the economy, there are going to be fewer than expected workers to celebrate after the release of the August employment report. While expectations were for an increase of more than 700K jobs during the month, the actual increase was a paltry 235K. The one bright spot to the report was average hourly earnings which rose more than expected (0.6% vs 0.3%). While the rate of increase in jobs was a disappointment, for investors fearing the Fed taper, ‘substantial further progress’ in the labor market may take longer to achieve than previously thought.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
As just about everybody knows at this point, September is a seasonally weak time of year for the equity market, and the gauges from our Stock Seasonality tool below illustrate this trend. Over the last ten years, the week following the close on 9/3 has seen a median decline of 0.43% which ranks in the 15th percentile relative to all other periods. For the upcoming month, the S&P 500’s median gain is just 0.08% which doesn’t rank much better (22nd percentile).
As the old cliche goes, though, short term pain is often followed by longer-term gains, and in the three months that follow the close on 9/3, the S&P 500’s median performance over the following three months has been a gain of 6.09% which ranks in the 97th percentile relative to all other three month periods. Like April showers bringing May flowers, September pain has often been followed by Q4 gains.
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Sep 2, 2021
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“You are remembered for the rules you break.” – Douglas MacArthur
Things are getting off to a slow start this morning (sorry for the delay) as the New York metro area tries to dry out from some massive flooding in the area which has shut down roads, highways, and mass transit. If this had occurred a few years ago, people would be wondering how they would get to work this morning, but in the post-COVID world, work for many people is as close as the nearest computer.
Equity futures are modestly higher again this morning as the ‘everything’ rally continues. Jobless claims were just released and came in lower than expected on both an initial and continuing basis and falling to post-pandemic lows. Later this morning, we’ll get updates on Factory Orders and Durable Goods.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
The everything rally is also giving a lift to the crypto space this morning as bitcoin has traded back above $50K and trading at its highest levels since mid-May. Following this morning’s gains, bitcoin still remains more than 20% below its record highs from earlier this year.
Even more impressive than the rally in bitcoin has been the run in Ethereum which has more than doubled off its July lows. At current levels, Ethereum is less than 14% below its prior record, and its ratio relative to bitcoin is even closer to record highs.
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Sep 1, 2021
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“Uneasy lies the head that wears a crown.” – William Shakespeare
The calendar may have changed, but the market hasn’t seemed to notice as futures are continuing the gains we saw to close out August. The first major economic report of the month was ADP Private Payrolls, and for the second straight month, it missed expectations by a wide margin (over 250K). Still ahead, we’ll have the Markit Manufacturing PMI report at 9:45 and ISM’s Manufacturing report at 10 AM.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
August marked the seventh straight month of gains for the S&P 500. That’s the longest winning streak for the index since the ten-month streak that ended in January 2018. Including the current streak, there have now been 15 winning streaks of seven or more months for the S&P 500 since 1945, and of the prior fourteen, the majority (10) went on to at least an eighth month, and whether or not the streak extended to eight months or not, the S&P 500’s median performance in the month after the seventh straight up month was a gain of 1.6%. The longest winning streaks for the S&P 500 all came in the 1950s when there were three separate winning streaks of 11 months, and the longest since then was the ten-month streak ending in January 2018.
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Aug 31, 2021
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“I always tried to turn every disaster into an opportunity.” – John D. Rockefeller
We’re six and a half hours of trading from wrapping up the month of August and the seventh straight month of gains for the S&P 500. Futures have been drifting lower this morning after gains overnight, but so far the declines remain modest. One catalyst cited for the weakness has been comments from an ECB Governing council member (Holzmann) suggesting that the ECB should at least start to talk about how it will remove policy stimulus.
On a brighter note related to COVID, Bloomberg reports this morning that beginning tomorrow Citigroup will increase capacity in its Hong Kong offices to 90% from an already relatively high level of 75%. Citi’s move follows similar moves from Goldman Sachs and Bank of America earlier this Summer. While Hong Kong’s case burden is considerably less than most other areas of the world, it’s encouraging to see at least one area of the world returning somewhat back to normal.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
While the ECB now joins other central banks around the world in discussing or already starting to remove accommodation, we’d note that August data hasn’t looked particularly good so far. Overnight, we had reports out of China showing that activity in the Manufacturing and Services sector slowed considerably. Here in the US, regional manufacturing Federal Reserve surveys for the month of August also showed a notable deceleration in momentum. While the headline readings of the five Federal Reserve surveys all still showed growth (with some at healthy levels), they all decelerated relative to July, and only the KC Fed survey managed to exceed expectations. We’ll get a further read on the state of the economy in August with the Chicago PMI today at 10 AM and then the ISM Manufacturing report at 10 AM tomorrow.
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Aug 30, 2021
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“The roots of education are bitter, but the fruit is sweet.” – Aristotle
It’s hard to get closer to unchanged in the futures markets this morning than we are now. The S&P 500 is indicated to open up by 3 points, the Nasdaq by 12, and the Dow higher by 10 points. While Hurricane Ida continues to slam Louisiana and the deadline for the US withdrawal from Afghanistan approaches, market-moving news is scarce this morning. In terms of economic data, Pending Home Sales will be released at 10 AM, and the Dallas Fed Manufacturing report comes out a half-hour later.
Last week was a good one for the US equity market with the S&P 500 rallying about 1.5% and the Russell 2000 surging more than 5%. Across individual sectors, though, returns for the week were mixed. For sectors like Energy, Financials, and Materials, it was a great week with all three rallying more than 2.5% and Energy surging by triple that rate. Despite the surge in Energy stocks, though, it is still the only sector that heads into the week below its 50-day moving average.
On the other end of the spectrum, Utilities, Consumer Staples, and Health Care all actually fell more than 1% while Real Estate was also lower. Given its weighting in the overall market, the sector that really matters is Technology, and with a gain of 1.45% that was actually up pretty much right in line with the broader market.
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Aug 27, 2021
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“Every time we can force our opponents into a bad decision, we win.” – Annie Duke
The moment investors have been waiting for all month is finally here. Will Fed Chair Jerome Powell hint at a taper or won’t he? That’s the question everyone is waiting for. While the market will no doubt react to the Fed Chair’s words, it’s likely only a matter of time before his comments are in the rearview mirror and the market shifts its focus to other things. Leading into the release of this morning’s speech, a number of Fed governors have been on the tape in the last 24 hours suggesting the need for the Fed to start the process of tapering, so while they could be greasing the skids for a start of the taper, the only opinion that really matters at this point is the opinion of the Chair.
A number of economic indicators just crossed the taps and while most were more or less inline with expectations, the biggest outliers were Wholesale Inventories which rose less than expected (0.6% vs 1.0%) and Personal Income which saw a big beat rising 1.1% compared to forecasts for an increase of 0.3%.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
It’s been a very strong five days for US equity markets even after yesterday’s decline. Since the close last Thursday, every one of the major index ETFs we track in our Trend Analyzer is up, and the only one that’s up less than 1% is the Dow Jones (DIA). Looking at the performance of the various ETFs, performance has been inversely correlated to market cap with the indices covering the smallest market caps up the most (Micro-Cap and Russell 2000) while the large-cap ETFs have seen more muted, albeit still impressive, returns. In terms of where each ETF stands relative to its trading range, the most overbought ETFs have generally been the laggards this week while the top performers are actually still below their 50-DMAs.
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