What’s new
Administrative topics and an introduction
Well folks, like I always say, there is never a dull week. This time around, we got a tanker blockage causing more strain on global supply chains (as if a global pandemic and an anomalous winter storm in Texas were not enough).
To add to other challenges, the COVID situation in Europe is getting worse, which is adding concerns about additional case surges across the Eurozone and Asia.
In US equities, the same story has continued, but to a lesser degree. We also saw a lot of dip buying this week.
Let’s get into some stories.
Did you miss the last edition? No worries! Get it right here and catch up on the madness.
Fundamentals
Where did the markets end last week?
U.S. Indices 5 Day Performance
Dow Jones: +1.36%
S&P 500: +1.58%
NASDAQ: -0.57%
Asia and Europe 5 Day Performance
Nikkei 225: -2.06%
Hang Seng: -2.25%
FTSE 100: +0.58%
DAX: +1.41%
Rates, Spot Prices, and ‘Good to Knows’
Market Madness Portfolio: +0.51%
CBOE Volatility Index (VIX): 18.86
US 10 YR: 1.685%
Crude OIL: $60.80
Spot Gold: $1,730.90
TEDRATE: 0.19
LIBOR (3 month): 0.19300%
U.S. Dollar Index: 92.76
EUR/USD: $1.1797
Pound/USD: $1.3792
USD/JPY: 109.56 JPY
USD/CNY: 6.54 CNY
Weekly update
An article by Christopher
Financial markets
There is a lot going on in the world, mostly carrying over from the week before. Eyes continue to watch the testimonies from the Fed, what’s going on with yields, and the potential for Joey B’s infrastructure deal. New on the docket this week is the Suez Canal blockage and the default risk in Turkey.
Stocks moved a lot this week but ended up mostly in the green (with the exception of tech). Various triggers in the week sent stocks lower, but investors were there to get in at lower levels and ultimately ended the week with nice gains, again, tech excluded. Some of the rebound was noted as momentum taking shape in the “reopening trade,” with names in airlines and cruise operators among others (all of which, funnily enough led the move down just the day before). Investors are keeping a keen eye to COVID numbers overseas, putting a potential damper on global reopening, as lockdown measures are being places over parts of Europe while they continue to develop a stronger vaccine rollout.
In some corners of the market, experts are suggesting the start-studded bull market we are in to continue cooling off, posting less frequent, smaller gains. No matter where you look, there is a great deal of disagreement on this topic, and many hold a counter view that this is a strong time to be investing in and holding USD-based assets. This, of course, will depend on your view on the world, and your investment thesis moving forward.
Generally, this week noted some dollar strength, with the DXY (USD Index) raising, as well as notable foreigns (Japan JPY and Chinese CNY) raising against the dollar. Gold retreated about $10 from last week’s reading, and crude oil held above $60 per barrel. Volatility has cooled off this week, but a rise in the TED RATE and the end of Q1 next week are leaving some to suggest increased volatility for the upcoming week.
Bonus Reads:
Buy A Dip, Any Dip – Heisenberg Report
Tech Stocks Led the Market Rally. Now They’re Falling Behind. - WSJ
Economic data and stimulus
This week was quieter with respect to economic headlines, but there are some notable points to mention. Treasury Secretary Yellen, alongside Fed Chair Jerome Powell, testified before the House Financial Services Committee to reiterate their stance once again on stimulus and inflation. Honestly, I don’t really expect the HFS Committee to really understand anything after seeing their hearing on Robinhood et al during the GameStop short squeeze, but I digress.
Home sales fell in February after data shows that more realtors are out there than homes for sale, i.e. supply is really tight right now and a lot of people are looking. A surprising print hit the tape this week for US durable goods, with orders dropping for the first time since last spring (-1.1% versus an expected +1% print). Much of this surprise print is due to ongoing realization of supply chain challenges that many global manufacturers are currently facing, further exacerbated by the Suez Canal problem (up next in stories for this edition).
On the good news side of the coin, weekly jobless claims last week hit a pandemic low (684,000 new claims), providing an optimistic outlook on next week’s jobless claims report and an ongoing trend, perhaps. A lot more will be disclosed when we get the March Jobs report on Friday, April 2 from the Bureau of Labor Statistics.
A final note that is likely to continue seeing developments in the coming weeks is the start of Joey B’s $3 trillion infrastructure development plan. The plan, mostly centered around infrastructure projects, would be a follow-on to the waves of federal support to help curb the pandemic. This project aims to put shovels back to dirt and get construction projects underway to improve existing roads, bridges, and tunnels, and to build new ones too. If this comes to life, we could see a major wave of municipal bonds hit the market for local states and cities to repay these infrastructure projects. But the bill would have to pass first, and like anything on the Hill, it will take a lot of time and headaches to get something done.
Bonus Reads:
US New Home Sales Collapsed 18% In February – Heisenberg Report
Powell Says Now Is Not the Time to Focus on Reducing Federal Debt - WSJ
Stuck in the Suez
An article by Christopher
As if the global supply chain story needed another bad twist, a 1,300+ foot long shipping vessel, “The Ever Given,” has become lodged sideways across the Suez Canal, one of the most frequented shipping routes in the Eastern Hemisphere. This has created a major backlog of shipping traffic through the busy canal and has led to many shipping vessels to reroute around the African peninsula.
The 120-mile Suez Canal, which connects the Red Sea with the Mediterranean, is a vital route for tankers carrying oil and natural gas. (excerpted from WSJ article)
Among other things, the canal is a main route for consumer goods as well, leading some to suspect store shelves might be barren once again for a period.
Continued efforts to refloat the vessel have failed as more nations vow to assist in the process. Current estimates put the clearance time at “weeks” and an economic impact cost of $400 million in delayed goods per hour the ship remains lodged. You don’t need to be a mathematician or an economist to understand the total burden this is putting on the economy right now. If any of the cargo containers of the Ever Given have perishables, forget about it. Non-perishables will be okay, just will be really delayed on their delivery times.
As of this writing, the ship is still stuck, and crews are working to try anything they can to free the trapped vessel. Live updates can be found here, supplied by the New York Times.
Bonus Reads:
Amplify Trading - Market Update & Importance of the Suez Canal Explained (via YouTube)
Suez Canal Is Blocked by Container Ship Causing Huge Traffic Jam - WSJ
Quick Takes
To fill in the gaps
Chip shortage strikes care manufacturers. (via CNBC)
Berkshire Hathaway offers to support Texas power infrastructure with $8.3 billion power plant. (via WSJ)
Jack Dorsey sells NFT of first tweet for $2.9 million. (via CNBC)
“Robinhood Trader’s Battle Cry: ‘It’s All Just a Game to Me’” (via WSJ)
Potential rise in gas costs at the pump as summer nears. (via WSJ)
Don’t try to time the market. (via CNBC)
The GME earnings report. (via CNBC)
Yellen favors share buybacks for banks. (via CNBC)
Powell weighs in on cryptocurrencies. (via CNBC)
Looking back at the Wirecard scandal. (via FT)
Robinhood confidentially files for IPO. (via CNBC)
The push to replace LIBOR intensified, despite unwillingness from lenders. (via WSJ)
More on Greensill’s demise. (via WSJ)
NFTs move into the digital land in a video game. (via WSJ)
News Corp to purchase Investor’s Business Daily for $275 million. (via WSJ)
Fidelity enters to BTC ETF race. (via Investopedia)
A study on EVs and environmental impact. (via WSJ)
Former Glencore oil trader charged with price manipulation. (via WSJ)
MSFT looking to purchase chat app Discord. (via WSJ)
More SPACs for you to fancy. (via WSJ (Axios) and WSJ (WeWork)
Civilians are killed in the wake of US sanctions on Myanmar following Coup that occurred in early February. The sanctions were being used as leverage to force generals out of Coup power. (via WSJ)
General Banter
What’s on the minds of our editors and writers
As compared to other nations still battling high COVID 19 cases and imposing lockdowns, the United States is extremely fortunate. All Americans should act like that. We’re not out of the woods yet.
Ongoing story, but worth keeping an eye on:
Reader’s Corner
A place for suggestions for readers like you
The reader might enjoy watching this Frontline Documentary on one of the largest insider trading scandals in US financial market: To Catch a Trader
What I’m Reading:
Options, Futures, and Other Derivates (10th edition) [for education]
Vanishing Games by Roger Hobbs [for interest]
Well done. You’ve made it through the madness. I’ve worked hard to ensure that you leave this page having learned something, and I hope that it benefits you in your daily adventure. Thank you again for checking in.