Narrative is US cases will peak any day following South Africa pattern.
Keep in mind:
* South Africa is only 30% vaxxed (US 63%)
* It's young with few restrictions
* So, everyone "breathed on each other" cases went up 100x in 30 days and then peaked.
The orange line is the probability of a March hike. It has been above 50% since December 21, over 2 weeks now.
The blue line is a June rate hike. That has been priced in since late-Oct.
The Fed minutes should not have been a surprised, it's been priced in for some time.
3/8
For a while I've talked about the disconnect between what the market has priced in and what the consensus says will happen. It is rare the market pricing is NOT the consensus view.
Just shy of 5 million Americans have tested positive in the last 10 days. This is 2.50% of the workforce.
2/3
Anecdotally ... companies are so confused by the CDC, and so scared by the liability of sick employees returning too fast, that they are ignoring the constantly shifting CDC/Fauci advice and requiring a 10-day quarantine followed by a negative test to return to work.
3/3
That is assuming one can even get a test in the first place.
So, yes, this is becoming a huge drag on production with this much of the workforce on "injured reserve."
Demand holding in, production lagging from a thinning workforce = more inflation.
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.
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.