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Good morning, Bull Sheeters, and happy Friday.
Global stocks appear set to finish the week on a strong note. U.S. Futures are climbing, following Europe and Asia higher. Adding to the risk-on feel, bond yields are in retreat, as is safe-haven gold.
With a strong showing today, there’s a chance all three major U.S. Averages could close out the week in the green. The Nasdaq is up so far for the week, aiming to snap a four-week losing streak.
Meanwhile, the crypto market remains subdued this morning. Bitcoin is hovering around $40,000; Ethereum is flat.
Let’s see what else is moving markets.
Markets update
Asia
- The major Asia indexes are closing out the week mixed. The Nikkei, the best of the bunch, is up 0.8%.
- Retail trading in China is booming, and that’s lifting Futu Holdings, the “Robinhood of China.” Futu on Thursday reported a huge bottom-line beat as it “plans to double down on international expansion,” reports Coins2Day‘s Yvonne Lau.
- Finally, a bit of relief in the Middle East. Israel and Hamas have agreed to a cease-fire in their bloody 11-day conflict.
Europe
- The European bourses are higher with the Stoxx Europe 600 up a mere 0.1% at the open, before climbing. Autos and tech lead the way higher.
- The EU has backed vaccine certificates. If approved, the holder is free to travel around the bloc with no need to quarantine. Alas, there are jitters over the fast-moving Indian COVID variant. Cases are multiplying in the U.K.
- Deutsche Telekom was one of Europe’s best performing stocks yesterday, climbing 2.5% on news it plans to take a majority stake in high-flying U.S. Wireless carrier T-Mobile.
U.S.
- U.S. Futures are holding onto their gains this morning. That’s after all three major averages closed higher yesterday with the S&P snapping a three-day losing streak, buoyed by Big Tech.
- A better-than-expected jobless claims number, coming in at a 14-month low of 444,000, lifted investor sentiment on Thursday. The yield on 10-year Treasury note fell on the news.
- The Biden Administration is floating a “global minimum” corporate tax of at least 15% for multinationals, which comes in lower than its initial proposal that foreign tax-friendly nations—[cough, Ireland]—have balked at.
Elsewhere
- Gold is off, trading around $1,870.
- The dollar is flat.
- Crude is down with Brent trading below $65/barrel.
- Bitcoin is kinda stuck, trading around $40,000. Investor sentiment is none improved after the U.S. Treasury said it wants all crypto transfers of at least $10,000 to be reported to the IRS.
***
By the numbers
-24%
After the week we’ve just gone through, of course I’m starting this section off with crypto. Bitcoin has had a brutal week. And that follows a rotten, no good month. The benchmark crypto is down 24% in the past seven days. That’s the bad news. The good news is it’s been fairly stable over the past 48 hours even if it struggles to break much beyond the $40,000 price limit. (I hope none of you jumped in when it rocketed above $60K way back in April.) My colleague Robert Hackett explains the technicals behind the sell-off. In short, the crypto market has proved itself to be “surprisingly resilient.”
Below average weighting
Bull Sheet readers are certainly well versed in the value > growth narrative that’s dominated the markets since the start of the year. Goldman Sachs has new data out showing hedge funds aggressively rotated out of momentum stocks in Q1 and into value (primarily energy and financials) to a level that’s below the 20-year average. “Funds remain tilted towards Growth but their current tilt is now the smallest since 2018 and registers below the average since 2002. The shift away from Growth has been pronounced among extremely high-growth, high-multiple stocks,” Goldman wrote in an investor note. “The rotation away from Growth was also evident at the sector level. Funds cut their exposures most in Info Tech, Consumer Discretionary, and Comm Services. Tech remains the largest underweight relative to the Russell 3000 (-667 bp). In contrast, funds lifted their tilts towards Industrials, Materials, Energy, and Financials.”
***
Have a nice weekend, everyone. I’ll see you back here on Monday… But first, there’s more news below.
Bernhard Warner
@BernhardWarner
[email protected]
As always, you can write to [email protected] or reply to this email with suggestions and feedback.
Today's reads
Friday housing update. My colleague Chris Morris has the latest data on the red-hot housing market. The median price is now $375,000 as realtors see double-digit growth for 40 consecutive weeks.
Lightning strikes. Quick, what's America's top-selling vehicle? Yep, Ford F-150 pickup. Ford is now introducing an electric version, the F-150 Lightning. Starting price: roughly $40,000.
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Market candy
13.3%
One more data point for you today: That's the two-day surge in shares of hard-disk drive maker Western Digital (Ticker: WDC). What's behind the rally? Analysts see it as well positioned to gain from the popularity of chia, a new eco-friendly crypto coin that uses spare storage space on hard computer users' hard drives.
