Stocks are poised to grow on Monday’s recovery, which followed the worst week for U.S. stock indexes since October. We’re going to focus on big gains, with e-commerce giant Amazon AMZN,
and Alphabet GOOGL, father of Google,
due after the market closes.
Our call of the day comes from two Wall Street banks, JPMorgan and Goldman Sachs, who don’t seem too concerned about the recent stock losses that have been fueled by the fierce battle between retail investors – spurred on by Reddit’s subtopic WallStreetBets – and short hedge funds such as the video game retailer GameStop GME,
In a note to clients, JPMorgan Cazenove London strategists, led by Mislav Matejka, acknowledge that recent stock retractions have fueled concerns about potentially greater losses and acknowledge a “healthy skepticism towards the chorus of experts who immediately declared an opportunity to purchase”.
“While there are likely to be fundamental, and not just technical, factors behind the weakness that can endure, we believe these obstacles may not last long,” said JPMorgan’s team, in a note to customers.
As for road blocks, Matejka and co. they say that concerns about liquidity foam spreading across markets have been simmering for a while, with some tactical indicators looking stretched. But they have calmed down, and that little pressure from retailers seems to be ending.
Read: How will this wild GameStop saga end? The ghosts of past commercial catastrophes offer clues
“Below the surface, consolidation has been going on for two months, with value / momentum dropping 9% in Europe and up 15% in the USA since the beginning of December. The excess is being removed, leading to a better starting point. “
In addition, a technical signal may be ready to favor bulls. “100% of the time post the VIX VIX,
peak, as seen last week, stocks would be higher in 1 and 6 months, out of recessions ”, says the team, referring to the Cboe Volatility Index, a measure of the expected S&P 500 SPX,
volatility in the next 30 days.
On the fundamental side, JPMorgan says the market seems ready to face upwinds, such as a stronger dollar, stagnant bond yields and mixed gains, and to focus on the likely rebound in economic activity in March-April. The team sees risky assets increasing in the first half of the year.
Meanwhile, at Goldman, a team of strategists led by Alessio Rizzi says that, despite the recent market turmoil, a “big turnaround in November earnings” is unlikely. In favor of stocks: an improving market scenario fueled by the COVID-19 vaccines, stimulus from the USA and a macro perspective practically unchanged.
“As a result, we think that the risk of a bear market next year is quite low. Although uncertainty remains high in the short term, considering some of the positioning metrics, such as the leverage of hedge funds, are still high, the recent market turmoil has not changed our constructive view on pro-cyclical assets for the rest of 2021 ” , strategists say.
Note, GameStop fell another 20% in the pre-market after losing 31% on Monday, as some say a piece of short positions has been eliminated. A look at WallStreetBets this morning shows that many posters are still available.
Read: Hey, Robinhood traders: These ‘non-bubble’ stocks can also be good bets for you
The markets
US stock futures ES00,
YM00,
NQ00,
are rising after the strong Monday session. European SXXP shares are also rising,
and Asian markets had an upbeat day. Meanwhile, SIH21 silver prices,
are pulling back from eight-year highs after the Chicago Mercantile Exchange increased margin requirements on futures contracts.
The buzz
Pharmaceutical company Pfizer PFE,
and the e-commerce group Alibaba BABA,
are among a lot of companies that report before opening. Shares of motorcycle manufacturer Harley-Davidson HOG,
are sinking after a surprise loss, while the sender of UPS UPS packages,
is emerging in optimistic results. Along with Amazon, the giant Chipotle CMG burrito,
and video game maker Electronic Arts EA,
will report after closing.
McDonald’s MCD, fast food giant,
has tested its new McPlant pea burger – the burger is provided by Beyond Meat BYND,
– in Denmark and Sweden.
At a meeting with Republicans on Monday, President Joe Biden said he would not agree to a scaled-down version of his proposed $ 1.9 trillion package.
A milestone of good news: vaccinations in the USA are approximately equal to the total number of COVID-19 cases.
The tweet
See why some think Tesla’s chief executive is doing a Twitter TWTR,
vent.
Read: SpaceX will take four space tourists by the end of the year
Random readings
Singer-songwriter Dolly Parton explains why she twice rejected former President Donald Trump’s offer of Freedom Medal.
National Basketball Association legend LeBron James against ‘Karen Court’.
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