Morning Note: Risk Is Rallying

Optimism over US fiscal stimulus prospects and positive commentary around the President’s present condition is overcoming news of re-lockdowns in New York City, Spain, France, UK and the Czech Republic as global markets get underway this week.

All but 3 of the 16 Asian markets we track closed higher overnight. All but 2 of the 19 European bourses we follow are heading higher this morning, while US major averages are green across the board: Dow up 272 points (0.99%), S&P 500 up 1.14%, Nasdaq up 1.52%, Russell 2000 up 1.30%.

The VIX (SP500 implied volatility), on the other hand, up 3.66%, has the options market pricing in trouble. Although VXN (Nasdaq vol) isn’t confirming that signal with regard primarily to tech stocks, down -0.03%.

Oil futures are up a whopping 5.51%, gold’s up 0.54%, silver’s up 1.74%, copper futures (bucking the bullish trend) continue to tank, down -1.31%, and the ag complex is up 0.22% as I type.

The 10-year treasury is taking a beating this morning (yield higher), and the dollar is providing a nice tailwind for risk assets, down -0.49%.

Hampered only by slight declines in utility stocks and the yen, our core mix is up 0.83% as I type. Silver, materials, banks, industrials and tech lead the way.

Having disconnected myself from late last week to last evening, I wasn’t able to produce the usual Friday macro update. Did, however, score our index last night. Summarizing the results for you below.

The PWA Index gained 6 points, taking our overall net score to -12.

Positive (to the point of score change) improvements showed up in
Auto Sales

PCE Inflation

Consumer Staples/Consumer Discretionary Equity Performance Ratio

and, thanks to strong iron ore demand out of China, the Baltic Dry Index.

Deterioration (to the point of score change) occurred in just one input:
Personal Income

We’ll get deeper into the macro weeds in this Friday’s update.
Have a great day!


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