Congrats! Another week done and dusted! On the markets side it continues to be an exciting, fast-paced, and volatile environment. We may be ending the week with the S&P up 0.81% but it has had quite the intra-week rollercoaster.
The power of a strong opening
The market opened up strong and firm on Monday morning – felt like a new month and the market was keen to move forward. Concern about interest rates was old news, that was last month. The market was ‘bid’, a phrase that means there were buyers aplenty for everything. Straight from the get-go we saw technology names recover from the brutal battering they had the previous week and we saw old favourite names like Tesla/Amazon/Microsoft/Alphabet/Netflix push higher also. The market ended the day with flashing green lights after one of the strongest days we had seen for several months. The S&P ended the day up over 2.5%. Good start to the week and a great start to the month!
Oil prices had been a key focus point for the market early in the week. Headlines out from the OPEC+ (this is a combination of the original cartel of oil producing countries like Suadi Arabia, Iraq, and Nigeria but with the addition of Russia more recently) meeting suggested that they might decide against increasing output at a key meeting later in the year. Having the big players effectively shrug their shoulders at holding the line, oil prices continued to move higher as they have been over the last few months. The graph below shows just how sharp a move Brent has had since the second half of 2020. It will be interesting to see if oil can keep up this momentum.
Everyone has been talking tech, tech, tech
Take a look at the following graph comparing oil producers against the Nasdaq. If you had invested in oil shares over technology shares over the last 5 months you would have made an extra 70%! [Though I should say on a 1 year horizon the Nasdaq gives you a 30% outperformance over oil, in approximately 4 years we have oil producers -25% and Nasdaq up 147%.]
The word from the Fed
Mid Week we heard from Jay Powell, the King of the Fed. He said he would keep Monetary Policy steady even as the economy improves and inflation begins to rise. There was nothing particularly new compared to what he said the month before and many other times during the crisis and it seems the market didn’t like what it heard. So we had a sell-off in equities and interest rates jumped higher. Why? Because people micro-analyzed his words and on the point of inflation he did not sound 100% certain. Words matter, his more than most, and he used the word ‘expect’. Even if the economy sees “transitory increases in inflation… I expect that we will be patient.” Jay Powell! Crazy things in these markets!
First Friday of the month
Every month on the first Friday at 1330 GMT we get the Non Farm Payroll report. This is the release of a series of numbers that have over the years come to represent how the US economy is faring and how the economy is treating its citizens. The Non Farm Payroll number for the month of February suggested that the economy added approximately 379,000 jobs, which is considerably better than what the experts expected. Combined with other positive economic news in the background stocks powered higher. All major groups in the S&P 500 finished on the plus side, led by energy stocks as crude oil futures rose to the highest in nearly two years.
One question I have is what about the job gains and losses on the farms!?
Watching social media watching you
One last gem for the brave – VanEck has launched a special new ETF that aims to track the BUZZ NextGen AI US Sentiment Leaders Index. What’s this index? It’s a measure of stocks that are generating ‘buzz’ on social media! Waiting to hear more about it but will be a great one to watch for sure!
Have a good week ahead!
