Energy stocks experienced their best year on record. The S&P Energy Index returned 54.64%, more than doubling the returns of all but the financials and info tech sectors.
3/4
Whether calculating returns in U.S. dollars or local currency, U.S. equities topped almost all other developed countries in 2021. In dollar currency terms, the MSCI U.S. Index outpaced the MSCI World Ex-U.S. Index by almost 14% last year.
4/4
Excluding precious metals, commodities had their best year on record. With data going back to 2001, the Bloomberg Commodities Ex-Precious Metals Index has never had a better year.
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Yes, the stock market rally has been very narrow. And yes, since the last stimulus check went out/inflation surged (March 15), inflation has beaten nearly all stocks.
Yes, this is worrisome, and "muddies" the signal of a strong economy.
97% of stocks were >200d MA in mid-April. While the overall SPX climbed and stayed well above its own 200d MA, the pct of stocks above their 200d MA steadily declined.
This is a sign that the rally through most of the year was being led by fewer and fewer stocks.
3/8
The following chart breaks the S&P 500 into ten deciles by mkt cap starting on March 15 (Last stimmy check, inflation takes off).
The 10th decile (largest), provided the best returns over this period. The smallest (decile 1) actually lost money the last 9 1/2 months.
Not the "wealthy" working from home chortling on twitter about their stock portfolio rocketing higher.
It was the "poor," the 40% of the country that rents and has less than $1,000 in savings, that was devastated by this policy.
3/4
Meanwhile, in other news, economists still cannot figure out why consumer confidence is at a 10-year low, and still worse than the April 2020 lockdown readings.
But traders and strategists say that some hedge funds are wagering that the yield curve will not flatten much more. ... Kavi Gupta, Bank of America’s co-head of rates trading, said that funds were indeed “still in steepeners”
3/5
A reminder of how the steepening trade has worked out for hedge funds so far
On Monday the number of COVID cases in the U.S. spiked as labs reopened after the holiday. While this is more a technical spike due to labs catching up from previous days, the seven-day moving average is on the verge of making a new high.
2/7
We have argued policy is a reaction function of rising cases. During this wave, imposed restrictions would mostly result in lost workdays as millions are following government guidelines and isolating.
This chart shows 2.04M tested positive in the past 10-days. If we assume 75% are in the workforce (few under 18 test positive), then 1.04% of the workforce is currently “out” with a positive test.
So, the effective unemployment rate just spiked 1.04% in the last 10-days.