Despite a fresh record high for the S&P overnight, European stocks are subdued on the final day of trading for the week. Concerns over the sluggish vaccine rollout in Europe and its impact on the region’s economic recovery are dragging on risk sentiment, overshadowing a dovish-sounding Fed Chair Powell. Federal Reserve Chair Jerome Powell has echoed the accommodative tone of the FOMC minutes, released on Wednesday. While he acknowledged economic progress, he stuck to his guns, saying the recovery would be uneven and there is a long way to go. Further confirmation of a supportive Fed sent treasury yields lower, fuelling the rotation back into growth stocks. Tech stocks outperformed, and the S&P surged to an all-time high. In Europe, a slew of … [Read More...]

Oil looking for direction Crude prices are struggling for direction as short-term COVID pressures are countered by a much weaker US dollar. There were no real fireworks from the FOMC minutes and no new emerging drivers for oil prices, leaving crude directionless. Some risks are brewing in the fight against COVID; China is facing a supply shortage for their vaccines, the US school-reopening is in jeopardy among virus spread with youth sports, and vaccine efficacy could be at risk as some European countries contemplate spreading out the time between first and second vaccine doses. Tightening supplies could continue despite some of the short-term headwinds to the demand outlook.  WTI crude continues to consolidate but could start to push higher if dollar weakness accelerates. Powell/… [Read More...]

Wall Street has started to look beyond life after COVID-19 and massive stimulus.  The Friday aftermath with Archegos Capital’s massive margin calls that led to the liquidation of over USD20 billion in stocks won’t be immediate.  With the S&P 500 index only down modestly, the damage appears to be contained.  Credit Suisse and Nomura are down over 13% after warning over potentially significant losses, while Goldman Sachs is down a few percentage points over losses that are being reported as likely immaterial.  Morgan Stanley has been quiet, while some traders believe they were probably in the same position as Goldman Sachs and likely. It does seem like the Friday beatdown for Viacom CBS, Discovery, and many Chinese tech stocks is a one-off event.  Undoubtedly the over-… [Read More...]