Accelerating Economic Growth, Tech Narrows Underperformance, and Is a Trend Reversal Approaching?
April 12, 2021 | FIRESIDE CHARTS
March PPI numbers topped forecasts with a year-over-year reading of 4.2%—the largest annual rise since September 2011. Fed Chairman Powell acknowledged that outlook has “brightened substantially” and the economy is at an “inflection point” during his appearance on 60 Minutes last night; will the Fed be able to retain control of accelerating growth? CPI—the Fed’s favored inflation measure—numbers are still to come tomorrow and may have something to say on the matter. Tech stocks meanwhile have also seen reawakened growth, narrowing their underperformance as small-caps pause to catch their breath. Could a potential head and shoulders pattern hint at an approaching trend reversal though? After spiking early in the pandemic, high yield bond spreads are once again approaching historic lows. And on the international front, after a period of underperformance, Chinese markets reacted positively to the record $2.8 billion fine against Alibaba and conclusion of the regulatory procedures. Will it be enough to establish some sustainable upward momentum?
1. If the FED and Congress want more growth, they will also have to contend with rising prices. While still “normal” now, is the FED in control?
Source: The Daily Shot, from 4/12/21
2. Up, up and away! Tech and consumer discretionary took back the reigns and surged over 4% last week:
Source: The Chart Store, from 4/12/21
3. After a near vertical run, small-caps are consolidating their gains:
Source: The Chart Store, from 4/12/21
4. Have small-caps put a head-and-shoulder pattern in place?
Source: The Daily Shot, from 4/12/21
5. High yield bond spreads are back down near historic lows:
Source: The Chart Store, from 4/12/21
6. The Chinese government, unsure what to do with Alibaba, decided to extract a $2.8 billion fine and move on for now. Given some of the more draconian alternatives, the markets liked the news:
Source: The Daily Shot, from 4/12/21
7. Less is sometimes more! Lincoln, a master in brevity, would be proud of Madison, Jefferson and the other drafters…
Source: The Daily Shot, from 4/12/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.