As we have said many times over the past several months, while the market as a whole is not in bubble territory, many parts of the market are. In particular, the technology sector is as expensive as I have ever seen. In fact, one of my worries has been that when the technology sector did correct, it might bring down the entire market.
A short while ago I questioned if 2021 might be a sell the COVID 19 vaccine news trade. I said it probably won’t, because central banks will keep pumping liquidity. However, a new twist is now unfolding, and that is higher bond yields.
When 100% of outstanding shares are shorted in any stock, you get a sort of a black hole short interest phenomenon. In other words, even if someone covers his shorts, someone comes on top and shorts even more shares.
I have never subscribed to the theory that interest rate differentials are what determine the value of currencies. Yes, differentials do play a role, but in my opinion a lot less than most people think. While the yield spread between 10-year US treasuries and 10-year Bunds has increased, this has not stopped the dollar falling almost 10% vs the Euro.
The renewable energy sector was one of the best investment opportunities in 2020, as the new US administration plans to re-join the Paris Climate Accord and make the country a global leader on climate change policy.
Global financial markets slightly fall in Tuesday trade, retreating from their record highs over persistent anxieties about possible barriers to Joe Biden’s $1.9T fiscal pandemic-relief stimulus and the rising Covid-19 cases around the world.
Cryptocurrency market has witnessed a massive selling pressure in the past few days, with Bitcoin price falling below $29.000 for the first time since Jan. 05, 2021, on growing concerns over regulation attention and a widespread profit-taking after the extraordinary rally.
Global equities hit fresh record highs on improved risk sentiment, gaining support from Netflix’s robust corporate earnings, Biden’s inauguration, and the falling US dollar-Yields. Biden’s inauguration-A new American chapter:
We know economies will experience a burst of growth when the COVID pandemic ends. Partially because of pent-up demand, Partially due to an increase in productivity (gained during the pandemic), and lastly growth due to the return of sectors like hospitality.
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