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Another record for stocks appears to be a tall order for Tuesday, with futures falling after hopes of a stimulus and soaring oil prices pushed stocks higher to start the week.
While momentum has slowed down a bit, this largely unstoppable market generally leaves little room for new highs. So, a refreshing break?
As for what could derail the stock market, our call of the day from global equities strategist Andrew Garthwaite and a team from Credit Suisse, offers a shortlist of red and yellow flags.
“We remained overweighted on equities thanks to a very favorable policy, a high ERP [equity risk premium], the start of a bond exchange for stocks and a huge excess of liquidity, while tactical indicators are not yet sending a sell signal, ”say the strategists.
For example, they aren’t too worried about the “exuberance” of the market right now, as they say retail flows are muted and there is little systemic risk or sell signals. from other indicators.
As for their concerns:
-
Disappointing growth in Europe – medium risk and rising. A slow rollout of the COVID-19 vaccine, leave plans and budget policy that appear less generous than the first time around are cause for concern. Unlike the United States, European banks are currently lending to businesses and bankruptcies are being removed by moratoriums. “We see this as a problem of European fairness, and not global, with European GDP [gross domestic product] accounting for around 16% of global GDP – although a tactically stronger dollar could be the consequence, ”the team says.
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Federal Reserve less accommodative – high risk in the second half of 2021. This is against a backdrop of stronger US growth potential amid easier fiscal policy, pent-up pandemic demand and economic reopening. “If this happens at a time when inflation is rising to 2.5%, wage growth is higher than expected and there are concerns about asset bubbles, the Fed could become less accommodating,” say Garthwaite and the team. Also watch the 10-year Treasury yields TMUBMUSD10Y,
1.156%
above 1.7% or sharply higher in TIPS (Inflation Protected Treasury) yields, they say. -
Slowdown in China – low to medium risk. The recent policy tightening isn’t too complicated, but China’s current account could deteriorate further as the global economy reopens. Keep an eye out for real estate market indicators, some of which point to a marked slowdown. If that happens, “the excess leverage would start to crumble,” Credit Suisse says.
Elsewhere: “We see the possibility that vaccines will not work against mutations as low risk, especially since the changes can be deployed in 3-6 months. Other low-risk events include the budget stalemate in the US Senate and policy errors (with the exception of UK fiscal policy and the loosening of French holidays, which we see as higher risk) ” , says the team.
Lily: Stock market echoes 2009-10 – and that means pullback could be near, analysts warn
The steps
ES00 futures contracts,
YM00,
NQ00,
are slightly lower, with European SXXP stocks,
in the red. Asian markets climbed after Wall Street’s record session. Brent Oil BRNJ21,
hit new highs above $ 61 a barrel.
Bitcoin BTCUSD,
just kept climbing, hitting $ 48,000 at one point, after electric car maker Tesla TSLA,
revealed a $ 1.5 billion investment in cryptocurrency and signaled that it will accept bitcoin as a future payment.
The tweet
Meanwhile, Tesla has apparently not been so generous with employee retirement plans.
The buzz
Canadian Cannabis Company Canopy CGC,
reported a larger loss than expected, but revenue estimates exceed expectations and shares are increasing. Materials and chemicals giant DuPont DD,
reports higher than expected profits and sales. Messaging service on social networks Twitter TWTR,
(see overview) and the technological conglomerate Cisco CSCO,
will report after closing.
Democrats on Monday unveiled their plan to get more stimulus money for families, increasing the current child tax credit from $ 1,000 for one year to $ 3,000 and slightly higher for families with smaller children.
The parents of a Robinhood trader who died by suicide in the face of a massive negative balance sued the online broker for wrongful death.
A small business confidence index shows optimism is at its lowest since the start of the pandemic last spring. Job postings are also ahead.
The World Health Organization says COVID-19 likely passed from an animal to a human, not from a Chinese lab.
Former President Donald Trump’s impeachment trial begins Tuesday.
Random readings
Free Ice Cream and Russian COVID-19 Vaccines? Another “The Simpsons” prediction comes true.
A Redditor asks how everyone is coping with pandemic depression, burnout and fatigue; he gets over 3,000 mostly miserable responses.
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