The Hour Glass Phenomena, Oh Canada, Wallet Haircut, Earth Day, ESG Investing

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It was as if someone had taken the Tuesday market, or really made it the two day market (Monday and Tuesday), and just knocked it over. “Like the hourglass sands, so are the days of our lives,” or at least “Wednesday’s trading hours” to paraphrase an old day soap intro.

It was fun? Of course it was. All the major stock indexes unnamed the Dow Jones Utility Average had a good day. In true reversal from the action experienced earlier this week, the day’s gains were all the more impressive the further down the market capitalization scale was.

The same “hourglass” phenomenon was observed in the sector performance tables. The five sectors considered cyclical took place from one to five, while the four defensive sectors took three of the four lower rungs of this scale. Not quite the surgical precision seen on the way down, but close enough for a cigar, in my opinion.

The US dollar softened throughout the session, in part due to the hawkish tone taken by the Bank of Canada. More on that in a minute or so, but what traders need to know is that Canada has taken developed countries’ first steps towards normalizing monetary policy upon exiting the pandemic, despite the fact that the Canada, at least in terms of new infections, doesn’t seem to be doing it. flatten their own curve.

In the US Dollar Index (DXY), known to currency traders as the “Dixie,” the Canadian dollar has a weighting of 9.1%. In addition to the weakness of the US dollar, the US Treasury yield curve remained stable, its most concentrated stock in a single security, the 10-Year Note, trading sideways throughout the day. This allowed the VIX and the three CBOE Put / Call ratios (Total, Equity, Index) to stay or fall below the three of their most crucial and focus on the daily averages (21-day exponential moving average, single move 50 days average, 200 days SMA).

What all of these conditions did together was set up a serious ‘risk-on’ day – a day when ‘reopening’ actions reigned supreme, while safe havens and ‘pandemic’ actions reigned supreme. for the most part played a supporting role or did not play at all. There is a catch here, however. Isn’t there always.

The width was quite fantastic. The winners beat the losers on both the NYSE and the Nasdaq by over 7 to 2, and the increase in volume caused the volume to beat down on both exchanges by over 8 to 1. It’s quite a swell. .

Aggregate trade presents an unfortunate problem, however. Trading volume declined significantly from Tuesday to Wednesday on the NYSE and on the Nasdaq market site. Aggregate trading volume fell as well as for the stocks comprising the S&P 400, S&P 500 and S&P 600, as well as for the Nasdaq Composite, the Nasdaq Composite 100 and also for the Russell 2000.

Hmm.

What does it mean?

In the most basic terms, this means that there was for most market metrics a larger distribution, in some areas much larger, Monday and Tuesday than there had been a build-up on Wednesday. Simply put, either some portfolio managers need to play “catch-up” on Thursday, or some of Wednesday’s euphoric action will need to relax. This is not a prediction, as I am pointing both ways.

Therefore, I did a good job after the closing bell on Wednesday (I still do), and gave a number of winners in my portfolio a nice haircut and a shave in order to protect myself and restore my cash balance (that was it. on the end square) to return to more normal levels. This balance, as you were going to ask, is not at its highest level in 2021, but it is now higher than what had been the average year to date.

Happy earth day

Come on Sarge, do you really care? Yes of course. Almost everyone who fancies themselves in the great outdoors is conservationists at heart. I’m the kid who roamed canyons and jungles. Sometimes even for fun. I’m the kid who swam far enough to have to figure out which side the beach was on. It’s not much fun, but you come across members of certain species that most humans don’t.

Yeah, so I’m a bit (moderate) conservative, but of course I believe in global warming. Listen gang, there’s no doubt that the planet, on average, is getting warmer. But you’re right, the planet has always warmed and cooled cyclically. In fact, every planet in our solar system heats and cools cyclically. Some are on almost the same cycle.

What remains to be proven is the extent to which human activity has accelerated this warming “season” on this planet. Having said that, there is little doubt that “we” have had more than zero, and probably a significant impact. Yes, I know Vikings who farmed Greenland twelve hundred years ago and now it’s too cold to farm there. Maybe we should call it climate change instead of global warming, but the general tendency is for average temperatures to be higher.

The top

Headlines for this “Earth Day” will come from President Biden’s Virtual Climate Summit which will feature not only the US President himself, but also Chinese President Xi, President Putin of Russia, President Bolsonaro of Brazil and Prime Minister Modi of India. The key here is that this could be an important area of ​​cooperation between the United States and two potentially strategic adversaries, and that India and Brazil are suffering terribly right now at the hands of the SARS-CoV-2 pandemic. In fact, in India the ‘double mutant’ variant which may fail to recognize antibodies from a previous infection and find ways to bypass current vaccines continues to spread (and mutate). This is why the Pfizer share price (PFE) is finally warming up. This vaccine is about to go global (in my opinion) to a large extent.

However, back to this summit. In total, 17 major economies representing around 80% of global emissions will participate in the two-day shindig. President Xi will speak on the first day … today. President Biden will also speak today and will in all likelihood pledge to halve U.S. greenhouse gas emissions by 2030 at the latest. This is almost double the commitment made by President Obama in 2015.

Do you think this segment is silly? Do you only care about the dough? Well, ESG style investing has never been so deep. BlackRock (BLK) is demanding it, and more than 400 companies have apparently signed on, supporting the Biden administration’s ambitions in tackling climate change. It’s not political, it’s about adapting as an investor, even if your pretty little heart is purely mercenary.

You may have heard of a few of these companies. They carry corporate names such as Apple (AAPL), Microsoft (MSFT), Walmart (WMT), Coca-Cola (KO), General Electric (GE), General Motors (GM) and many more. You get the drift. All walks of life, including industrial types.

So go for a walk. Take a picture of a bird. As always, focus as an investor on capital flows. Give everyone a chance. Pray for them all. Trust no soul. That’s all.

The Bank of Canada

However, the Bank of Canada really did nothing other than revise its forward-looking forecasts on Wednesday. That said, the BOC is talking about a much more belligerent game. While the central bank reiterated its intention to leave its benchmark interest rate (0.25%) where it was until the economic recovery from the pandemic is complete and consumer inflation stays at 2% or more, looking a lot like the Fed, that’s where the similarity ends.

The BOC raised the GDP growth projections for 2021 to 6.5% and introduced in the second half of 2022 monetary policy changes such as reducing quarterly asset purchases (quantitative easing) and raising interest rates. short-term interest.

Why talk about your own currency long before any other central bank, long before it has to be? I can’t answer for Tiff Macklem, but he probably put his nation at a short-term trade disadvantage quite unnecessarily. I heard that Mark Carney is unemployed. You know, he was pretty good at it on both sides of the pond. He is Canadian.

Economy (All Eastern hours)

8:30 a.m. – Initial jobless claims (weekly): Last 576K.

8:30 a.m. – Continuing complaints (weekly): Last 3.731M.

10:00 – Sales of existing homes (March): Expected 6.19M, Latest 6.22M SAAR.

10:00 a.m. – Leading indicators (March): Expected 0.7% m / m, last 0.2% m / m.

10:30 am – Natural gas inventories (weekly): Last + 61B cf.

1:00 p.m. – Kansas City Fed Manufacturing Index (April): Wait 19, last 23.

The Fed (All Eastern hours)

Fed blackout period.

Daily Income Highlights (Consensual BPA expectations)

Before the Open: (AAL) (-3.91), (T) (0.79), (BIIB) (5.02), (DHR) (1.69), (DOW) (1.06), (FCX) (0.51), (HCA) (3.29), (LUV) (-1.87), (UNP) (2.14)

After closing: (SAM) (2.77), (INTC) (1.14), (SNAP) (-0.05)

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