Cameron Dawson looks at the divergent performance of the US and China markets in 2021 and contemplates what could happen next in this week’s Market Perspective – A Tale of Two Sentiments: Univestable and Unstoppable.
Tourists from all over the world come to spend their money in Orlando, whether it is to brush shoulders with the mouse or to take advantage of the area’s substantial discount shopping offerings. For years I’ve been getting a feel for global cycles by asking the salespeople at the outlets: “Who’s shopping?”
In a way, the album “Rumors” is a study in compromise. Powell’s market-celebrated, “dovish taper” speech from Friday’s Jackson Hole Symposium was another study in compromise and contained its own “chain”.
In the spirit of looking beneath the surface and stripping off obfuscating layers, we approach today’s analysis of markets with an attempt to reveal its true colors. Spoiler alert: the market picture that is revealed is not as splendid as the Sistine fresco.
Living in a city like New York tends to force-feed you certain life lessons. Some are narrow, like 600 square feet is exceedingly spacious, while others are broad, like change is the only constant.
Jobs data was strong in July, showing continued healing in the U.S. labor market. Strong jobs data pushes the Fed to make a call on tapering, but it will likely try to hold off until the Fall when the backdrop is more “normal.”
We are almost two-thirds of the way through earnings season (60% of S&P 500 companies have reported) and there are a few important takeaways. First, earnings are coming in better than expectations.
We are not going to go out of our depth to provide thorough country assessments, but instead, look at what the broad make-up of the indices and their relative performance can tell us about the future prospects of these non-U.S. markets.
Prior to this downdraft, we had been in an incredibly resilient period for equities. In fact, it was the second-longest period on record without a 5% correction (the longest was 2017).
Many prognosticators think the bond market is reacting to just the technical/positioning driver, but we think it is a mixture of positioning, peak data, and preemptive fed.
It is clear that the one-time impacts from the shocks of shut-down and reopening will dissipate in the coming months. The base effect tailwind of easy comparisons from 2020 becomes a headwind of tough comparisons next year when comparing to 2021.
The S&P 500 had its 33rd day in 2021 closing at an all-time high last week, though, since April, a declining number of stocks have been joining in on the new-high party.