It’s another busy week of profits and the stock looks set to get off to a good start.
Profits aside, the expectation that new stimuli will heat up the US economy has generated optimism. Treasury Secretary Janet Yellen said President Joe Biden’s $ 1.9 trillion aid plan could generate enough growth to restore full employment next year.
In more signs of optimism about the recovery, Brent BRN00 oil futures,
reached $ 60 a barrel on Monday for the first time in more than a year. The yield of the 10-year US Treasury TMUBMUSD10Y,
rose to 1.20%.
GameStop GME powered by Reddit,
the frenzy appears to have cooled, after the heavily sold video game retailer’s shares fell 78% last week, having shot up 1,737% in the previous three weeks.
In our call of the day, Deutsche Bank DB,
strategists said most of the shares sold have outperformed since last March, long before users of Reddit’s WallStreetBets forum took aim.
They said that while the shares sold typically fared better during bulls, the size of the current high was “off the chart”.
Since the bottom of the market in March, the most sold shares – defined as the top 10% as a percentage of market value – have risen 245%, exceeding the Russell 3000 RUA index,
by 147 percentage points.
Compustat, Haver, Deutsche Bank Asset Allocation
Led by chief strategist Binky Chadha, they noted that half of that top performance came before the November United States elections and positive vaccine development.
They said that the superior performance cannot be explained by the broad market or “recovery from everything”, nor entirely attributed to the retail buying trend, which has accelerated the superior performance since November.
“We see this reflecting the fact that the exposure sold remained strongly concentrated in stocks with low profitability and growth, especially in sectors affected by the pandemic, even as the economic recovery unfolded improving the prospects for these companies,” they said.
Although the recovery begins to unfold, sales are still focused mainly on industries affected by the pandemic, they noted, adding that there is skepticism about a strong recovery. “Nine months after the end of the shortest recession, in our opinion, the consensus was persistently lagging behind the real improvement in macro data.”
They also said that despite a third consecutive quarter of “huge” record earnings beats for S&P 500 companies, the 2021 consensus has risen slightly and is well below their own forecasts.
The markets
US stock futures YM00,
ES00,
NQ00,
pointed higher before opening at the beginning of another busy earnings week. European equities also made gains in early trading, despite concerns about the spread of new variants of the coronavirus that causes COVID-19. Asian markets were up overnight due to growing optimism about the global economic recovery.
The buzz
The price of Bitcoin BTCUSD,
rose to $ 44,088, reaching a new historical record after the Tesla TSLA,
said it acquired $ 1.5 billion in cryptocurrencies in January and may accept the digital asset for payment in the future.
Hyundai Motor Co. 005380,
said on Sunday that it is not in talks with the technology giant Apple AAPL,
develop an autonomous electric car, contrary to several reports.
Social media platform Twitter TWTR,
is expected to record its second quarter of $ 1 billion in revenue when it reports earnings on Tuesday, according to analysts polled by FactSet.
The Biden government is expected to announce this week that it will meet with the United Nations Human Rights Council, from which then President Donald Trump withdrew nearly three years ago, American officials said on Sunday.
Dialog Semiconductor DLG, Apple’s chip supplier,
0OLN,
was snapped up by Japanese Renesas Electronics in a € 4.9 billion ($ 5.9 billion) deal.
The Tampa Bay Buccaneers dominated the Kansas City Chiefs when quarterback Tom Brady secured his seventh Super Bowl title and his first with a different team from the New England Patriots.
Random reading
Why some scientists think that all life started on Mars.
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