growth stocks

Investors can buy stocks that fall into a wide variety of categories. There are growth stocks, which represent companies that are quickly expanding their businesses and reporting high revenue and/or earnings-per-share growth. Then there are value stocks, typically those with low stock valuations, as measured by various ratios such as price-to-earnings or price-to-sales. Finally, there are dividend stocks, which are companies that distribute cash to shareholders through periodic dividend payments. We believe investors looking for superior long-term returns should focus on the best dividend growth stocks, which are companies that offer the best of both worlds. The best dividend growth stocks, such as the Dividend Aristocrats, pay dividends to shareholders with the added bonus of dividend growth each year. We believe investors looking to generate long-term wealth should consider the Dividend Aristocrats. Dividend Aristocrats Overview The Dividend Aristocrats are a group of 65 stocks that have increased their dividends for at least 25 years in a row. There are additional criteria that must be satisfied in order to become a Dividend Aristocrat. For example, a company must be in the S&P 500 Index, have a market capitalization of at least $3 billion, and its shares must have a daily average volume traded of at least $5 million. The relative scarcity of the Dividend Aristocrats—which total 65 stocks out of more than 500 stocks in the S&P 500 Index—demonstrates the difficulty in raising dividends each year for over 25 consecutive years. Such a long period of time will inevitably include recessions, and a variety of other global issues to deal with. For a company to be able to raise its dividend through so many challenges, it must have a strong business model that generates steady profits year after year. It must also have long-term growth potential, and a shareholder-friendly management team that understands the importance of raising dividends each year. Another advantage of the Dividend Aristocrats is that many of them have significantly higher yields than the broader market average. For instance, the S&P 500 Index as a whole currently has an average dividend yield of 1.5%. Meanwhile, the ProShares S&P 500 Dividend Aristocrats (NOBL), the major exchange-traded fund that tracks the Dividend Aristocrats, currently yields 2.2%. Investors can purchase a basket of all Dividend Aristocrats with NOBL, or purchase the individual stocks, many of which have even higher yields than NOBL. For example, People’s United Financial (PBCT) is a Dividend Aristocrat from the banking industry, with a high dividend yield of 5.2%. AT&T (T) is a Dividend Aristocrat with an even higher yield of 7%. Our top-ranked Dividend Aristocrat has an even higher yield than People’s United or AT&T. Our Top Dividend Aristocrat Today Exxon Mobil (XOM) is our top-ranked Dividend Aristocrat, and it is also the highest-yielding Dividend Aristocrat with a 7.7% yield. While higher-yielding stocks are often accompanied by elevated levels of risk, there are multiple quality Dividend Aristocrats with high dividend yields above 5%. In the case of Exxon Mobil, its abnormally high dividend yield is due to its plunging share price over the past few years alongside the drop in oil prices. The broader energy sector was under duress over the past few years, as a global supply glut put downward pressure on oil prices. Then, the coronavirus pandemic of 2020 had a major impact on global demand for oil, which served as an added headwind for oil stocks. Exxon Mobil has deployed aggressive cost-cutting to preserve its dividend in the short-term. The company announced plans to cut its capital expenses 30% in 2020. It also announced it will cut 15% of its global workforce to further cut costs. Over the long-term, the company expects the global oil price to rebound as the global economy recovers from the coronavirus pandemic. It is also betting its future on growing its production, which will be possible due to the company’s premier assets. The Permian will be a major growth driver, as the oil giant has about 10 billion barrels of oil equivalent in the area and expects to reach production of more than 1.0 million barrels per day in the area by 2025. Guyana, one of the most exciting growth projects in the energy sector, will be the other major growth driver of Exxon. The company has nearly tripled its estimated reserves in the area, from 3.2 billion barrels in early 2018 to nearly 9.0 billion barrels. Overall, Exxon Mobil expects to grow production by 25%, from 4 million barrels per day to 5 million barrels per day by 2025. We expect Exxon Mobil to grow earnings-per-share by 8% per year over the next five years, driven by a higher oil price as well as rising production. Although we view the stock as slightly overvalued at the present time, with a fair value price of $42 versus a current price of $46, we still see the stock as generating strong total returns. In addition to earnings-per-share growth, future returns will be driven by the high dividend yield of 7.7%. Overall, we see the potential for total returns to reach nearly 14% per year over the next five years, a highly attractive expected return for a Dividend Aristocrat. Final Thoughts Investors should not overlook the value of dividends. While growth stocks tend to receive much of the coverage in the financial media, dividend stocks have been proven to build wealth for shareholder over the long run. According to Standard & Poor’s, dividends have accounted for approximately one-third of the stock market’s total return since 1926. We believe the highest-quality dividend growth stocks, such as the Dividend Aristocrats, can generate superior long-term total returns.   By Bob Ciura of Sure Dividend

Is the worst of what the last few weeks brought over? February started off with so much promise, only to be ruined by surging bond yields.The way that bond yields have popped has weighed heavily on growth stocks. Outside of seeing a minor comeback on Friday (Feb. 26), the Nasdaq dropped almost 7% between February 12 and Friday’s (Feb. 26) close.Other indices didn’t fare much better either.The spike bond yields, however, in my view, are nothing more than a catalyst for stocks to cool off and an indicator of some medium to long-term concerns. But calling them a structural threat is a bit of an overstatement.Rising bond yields are a blessing and a curse. On the one hand, bond investors see the economy reopening and heating up. On the other hand, with the Fed expected to let the GDP heat up without hiking rates, inflation may return.I don’t care what Chairman Powell says about inflation targets this and that. He can’t expect to keep rates this low, buy bonds, permit money to be printed without a care, and have the economy not overheat.He may not have a choice but to hike rates sooner than expected. If not this year, then in 2022. I no longer buy all that talk about keeping rates at 0% through 2023. It just can’t happen if bond yields keep popping like this.So was the second half of February the start of the correction that I’ve been calling for? Or is this “downturn” already over?Time will tell. While I still do not foresee a crash like we saw last March and feel that the wheels are in motion for a healthy 2021, I still maintain that some correction before the end of this month could happen.Corrections are also healthy and normal market behavior, and we are long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017), and we haven’t seen one in almost a year.A correction could also be an excellent buying opportunity for what could be a great second half of the year.Pay attention to several things this week. The PMI composite, jobs data, and consumer credit levels will be announced this week.We have more earnings on tap this week too. Monday (March 1), we have Nio (NIO) and Zoom (ZM), Tuesday (March 2) we have Target (TGT) and Sea Limited (SE), Wednesday (March 3), we have Okta (OKTA) and Snowflake (SNOW), and Thursday (March 3) we haveBroadcom (AVGO).My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The downturn we experienced to close out February could be the start of a short-term correction- or it may be a brief slowdown. A further downturn by the end of the month is very possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- a Buyable Slowdown?Figure 1- Nasdaq Composite Index $COMPThe Nasdaq’s downturn was so overdue. Even though more pain could be on the horizon, I like the Nasdaq at this level for some buying opportunities.If more losses come and the tech-heavy index dips below support at 13000, then it could be an even better buying opportunity. It can’t hurt to start nibbling now, though. If you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.Plus, if Cathie Wood, the guru of the ARK ETFs that have continuously outperformed, did a lot of buying the last two weeks, it’s safe to say she knows a thing or two about tech stocks and when to initiate positions. Bloomberg News ’ editor-in-chief emeritus Matthew A. Winkler wouldn’t have just named anyone the best stock picker of 2020.Before February 12, I would always discuss the Nasdaq’s RSI and recommend watching out if it exceeds 70.Now? As tracked by the Invesco QQQ ETF , the Nasdaq has plummeted almost 7% since February 12 and is closer to oversold than overbought. !While rising bond yields are concerning for high-flying tech stocks, I, along with much of the investing world, was somewhat comforted by Chairman Powell’s testimony last week (even if I don’t totally buy into it). Inflation and rate hikes are definitely a long-term concern, but for now, if their inflation target isn’t met, who’s to fight the Fed?Outside of the Russell 2000, the Nasdaq has been consistently the most overheated index. But after its recent slowdown, I feel more confident in the Nasdaq as a SHORT-TERM BUY.The RSI is king for the Nasdaq . Its RSI is now around 40.I follow the RSI for the Nasdaq religiously because the index is merely trading in a precise pattern.In the past few months, when the Nasdaq has exceeded an overbought 70 RSI, it has consistently sold off.December 9- exceeded an RSI of 70 and briefly pulled back.January 4- exceeded a 70 RSI just before the new year and declined 1.47%.January 11- declined by 1.45% after exceeding a 70 RSI.Week of January 25- exceeded an RSI of over 73 before the week and declined 4.13% for the week.I like that the Nasdaq is almost at its support level of 13000, and especially that it’s below its 50-day moving average now.I also remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.Because of the Nasdaq’s precise trading pattern and its recent decline, I am making this a SHORT-TERM BUY. But follow the RSI literally.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as the streaky S&P, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

The theme of last week was primarily the same as the previous few weeks- rising bond yields and inflation fears caused stocks to crumble.Look, it's not the fact that bond yields are rising that are freaking out investors. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. But it's the speed at which they've risen that are terrifying people. So far this year, the 10-year yield has soared 72%Fed Chair Jay Powell's statement that inflation could "temporarily return" did not help matters much last week either. However, despite the fears, the indices really did not perform all that badly the previous week after a Friday (Mar. 5) reversal. The Dow Jones managed to gain 1.8%, the S&P eked out a 0.8% gain, and after briefly touching correction territory and giving up its gains for the year, the Nasdaq managed to decline only -2.1%.So what's on tap for this week? Is the downturn overblown and already over?This is a massive week for market sentiment. The Senate, first and foremost, passed President Biden's $1.9 trillion stimulus plan over the weekend. On the one hand, stocks could pop from this. On the other hand, this makes inflation a foregone conclusion. Remember this, too- when the market gets what it expects, it's usually a sell signal rather than a buy signal. Markets look forward. Not to the past, and not to the present.Important data being released this week also includes inflation data, initial claims, and consumer sentiment.Time will tell where we go from here. While I still do not foresee a crash like we saw last March and feel that the wheels remain in motion for a healthy 2021, inflation is a genuine concern and could be here already.According to Bloomberg , the price of gas and food already appear to be getting a head start on inflation. For January, Consumer Price Index data also found that the cost of food eaten at home rose 3.7 percent from a year ago — more than double the 1.4 percent year-over-year increase in all goods included in the CPI.This could only be the start too. In its 2021 outlook report, the Economic Research Service for the U.S. Department of Agriculture forecast the food cost from grocery stores to rise 1 to 2% this year.Moody's Analytics chief economist Mark Zandi also believes that Wall Street is significantly underestimating inflation's seriousness and warns it could affect every sector in the market — from growth to cyclicals."Inflationary pressures will develop very quickly," he said. "I don't think there's any shelter here."I'm not trying to sound the alarm- but be very aware. These are just the early warning signs.I still feel that a correction of some sort is imminent. The Nasdaq touched it briefly last week and is still about 2% away from one. Other indices could possibly follow. But don't fret. Corrections are healthy and normal market behavior, and we have been long overdue for one. Only twice in the last 38 years have we had years WITHOUT a correction (1995 and 2017).Most importantly, this correction could be an excellent buying opportunity.It can be a very tricky time for investors right now. But never, ever, trade with emotion. Buy low, sell high, and be a little bit contrarian. There could be some more short-term pain, yes. But if you sat out last March when others bought, you are probably very disappointed in yourself. Be cautious, but be a little bold too.There's always a bull market somewhere, and valuations, while still somewhat frothy, are at much more buyable levels now.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. A further downturn by the end of the month is very possible, but I don't think that a decline above ~20%, leading to a bear market, will happen.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Buyable but Beware of the RisksFigure 1- Nasdaq Composite Index $COMPThe Nasdaq is no longer in correction territory, nor is it negative for 2021 any longer. But beware- this could change very quickly. More pain could be on the horizon until we get some clarity on this bond market and inflation. However, this Nasdaq downturn is long overdue and starting to be buyable.If you bought at the bottom on Friday before the afternoon reversal and made some quick gains, good on you. It actually didn’t end up being THAT bad of a week for the Nasdaq after Friday’s (Mar. 5) reversal.Be that as it may, Friday’s (Mar. 5) reversal does not mean we’re out of the woods. According to Morgan Stanley’s chief U.S. equity strategist Mike Wilson , “10-year yields finally caught up to other asset markets. This is putting pressure on valuations, especially for the most expensive stocks that had reached nosebleed valuations.”Expensive stocks? Nosebleed valuations? Sounds like tech to me.Wilson also said that once valuation correction and repositioning are finished, then growth stocks can potentially “rejoin the party.”The Nasdaq is now mostly flat for the year, its RSI is closer to oversold than overbought, and we’re at almost a 2-month low.It can’t hurt to start nibbling now. There could be some more short-term pain, but if you waited for that perfect moment to start buying a year ago when it looked like the world was ending, you wouldn’t have gained as much as you could have.I think the key here is to “selectively buy.” I remain bullish on tech, especially for sub-sectors such as cloud computing, e-commerce, and fintech.I also think it’s an outstanding buying opportunity for big tech companies with proven businesses and solid balance sheets. Take Apple (AAPL), for example. It’s about 15% off its January 26th highs. That is what I call discount shopping.I like the levels we’re at, and despite the possibility of more losses in the short-run, it’s a good time to start to BUY. But just be mindful of the RSI, and don’t buy risky assets. Find emerging tech sectors or high-quality companies trading at a discount.For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as when small-caps will be buyable, more thoughts on inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Last week went a lot better than the week before. Especially if you’re a Nasdaq bull and bought the dip ( like I recommended Feb 24 ).The real story, though? We’ve still got the Dow, S&P, and Russell firmly at record highs.This week should be full of excitement for the indexes. Will we see more record highs? Will the Nasdaq catch up and recover? How will the newly signed $1.9 trillion “America Rescue Plan” impact the market? Will inflation fears and accelerating bond yields spook investors again?As you can see, there are clearly questions right now for stocks- despite the wheels in motion for pent-up consumer spending and a strong stock rally. Plus, we’ll start having many retail investors with an extra $1,400 to spend looking to have a little fun.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Bond yields are still at a historically low level, and the Fed Funds Rate remains 0%. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.So what should you pay attention to this week?More inflation data, jobless claims, and consumer sentiment will be released throughout the week, for one.But pay incredibly close attention to the Fed. Bonds still remain the market’s biggest wild card. With the Fed meeting Tuesday and Wednesday, bond yields could take their cue from what they say. No action is expected to be taken, and the Fed is expected to indicate more substantial growth. Fed officials are also not expected to alter their interest rate outlook and may stick to the plan of keeping rates this low through 2023.If this goes as expected, bond yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Is the Dow *Gulp* Overbought?Figure 1- Dow Jones Industrial Average $INDUNot much new to report on this. Except for that, it keeps ticking up towards overbought territory and hitting record highs. Year-to-date, we’re now up about 7.1%- almost double what the S&P and Nasdaq have done so far this year.It also managed to gain over 4% this past week.I don’t feel that we’re buyable at all right now. If you have exposure, HOLD and let it ride. Maybe start to consider taking some profits too.The index could greatly benefit from the stimulus package due to all of the cyclical stocks it holds. I can definitely foresee some pops in the index as investors digest the unprecedented amount of money being pumped into the economy, coupled with reopening excitement. But you can’t expect the index to keep going up like this and setting records every day. Plus, the RSI is almost 69 and showing overbought signs.So, where do we go from here?Many analysts believe the index could end the year at 35,000, and the wheels are in motion for a furious rally. But you could do better for a buyable entry point.From my end, I’d prefer to stay patient, assess the situation, and find better buying opportunities.My call on the Dow stays a HOLD, but we’re approaching SELL.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a reliable option.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Prepare yourself. March Madness could be here. No, I’m not talking about the college basketball tourney either.Stocks will be hanging onto Jay Powell’s every word and every breath on Wednesday (Mar. 17) and scrutinize his thoughts on interest rates and inflation.Pretty much, we’re the Fed’s hostages until this thing gets some clarity. Even if Powell says nothing, the markets will move. That’s just how it’s going to work.Rick Rieder, BlackRock’s CIO for global fixed income, echoed this statement. “I think the last press conference, I think I watched with one eye and listened with one ear. This one I’m going to be tuned in to every word and the markets are going to be tuned in to every word. If he says nothing, it will move markets. If he says a lot, it will move markets.”Jay Powell is the biggest market mover in the game now. What’s coronavirus anymore?So far, it’s been a relatively tame week for the indices. The Nasdaq’s continued playing catch-up and has outperformed, while the Dow and S&P are still hovering around record highs.The wheels are in motion for pent-up consumer spending and a strong stock rally. Plus, we have that $1.9 trillion stimulus package heating up the economy and an army of retail traders with an extra $1,400 to play with.Inflation fears and surging bond yields are still a concern and have caused significant volatility for growth stocks. But let’s have a little perspective here. Plus, jobless claims beat estimates again and came in at 712,000. This is nearly the lowest they’ve been in a whole year. Last week’s inflation data also came in more tamer than expected.But bonds yields still remain the market’s biggest wild card. Yes, yields are still at a historically low level, and the Fed Funds Rate remains 0%. But depending on how things go around 2 pm Wednesday (Mar. 17), yields could potentially pop again, reinvigorating the rotation into value and cyclical plays and out of tech and growth plays.Time will tell what happens.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Lessons LearnedFigure 1- iShares Russell 2000 ETF (IWM)The Russell 2000 was the biggest laggard on Tuesday (Mar. 16). I think I’m starting to figure this index out, though, for a solid entry point.I have been kicking myself for not calling BUY on the Russell after seeing a minor downturn when the markets got rocked in the second half of February. I may have broken my own rule about “not timing the market” also. I’ve wanted to buy the Russell 2000 badly forever but never thought it dipped hard enough (whenever it did). I was waiting for it to at least approach a correction.But I think I figured out a pattern now. Notice what happened with the Russell almost every time it touched or minorly declined below its 50-day moving average. It reversed. Look at the above chart. Excluding the large crash and subsequent recovery in late-March and April 2020, 5 out of the last 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Now, look at the index. As tracked by iShares Russell 2000 ETF (IWM) , its rally since November and year-to-date have been mind-blowing. Pretty much, this is the one reason why I’m more cautious about buying the index.Since the market’s close on October 30, the IWM has gained about 51.04% and more than doubled ETFs’ returns tracking the more major indices.Not to mention, year-to-date, it’s already up 19.12% and around at an all-time high.With that $1.9 trillion stimulus package set to greatly benefit small businesses, the Russell 2000 could pop even more.Unfortunately, I’m keeping this a HOLD. But I am monitoring the Russell 2000 closely.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for. The next time the index approaches its 50-day moving average, I will be a little more aggressive.For more of my thoughts on the market, such as tech, if small-caps are buyable, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

March Madness started on Thursday (Mar. 18), but stocks got the jump on their own brackets this week. Let’s dive in.Although Wednesday (Mar. 17) saw the indices have a nice St. Patrick’s day green reversal thanks to Jay Powell babying us on inflation thoughts again, Mr. Market isn't stupid. Manic, but not stupid. We saw a return to the strong rotation trend out of growth stocks the day after Powell's testimony (Mar. 18).Thursday (Mar. 18) saw bond yields surge to their highest levels in what seems like forever. The 10-year yield popped 11 basis points to 1.75% for the first time since January 2020, while the 30-year rate climbed 6 basis points and breached 2.5% for the first time since August 2019.Predictably, the Nasdaq tanked by over 3% for its worst session in 3-weeks.Jay Powell and bond yields are the most significant market movers in the game now. Get ready for the market next week when he testifies to Congress. That'll be a beauty. What's coronavirus anymore?So after what's been a relatively tame week for the indices, we can officially say bye-bye to that.Bond yields, though, are still at historically low levels, and the Fed Funds Rate remains at 0%. With the Fed forecasting a successful economic recovery this year, with GDP growth of around 6.5% -- the fastest in nearly four decades -- the wheels could be in motion for another round of the Roaring '20s.The problem, though, is that the Great Depression came right after the first Roaring '20s.Many are sounding the alarm. However, like CNBC's Jim Cramer, others think the current headwinds are overblown, and a mirror of the 2015-2016 downturn is based on similar catalysts.Figure 1: Jim Cramer TwitterCramer argued that Powell is a talented central banker willing to "let the economy continue to gain strength so that everyone has a chance to do well."Nobody can predict the future, and these growth stock jitters from rising bond yields may be overblown. But for now, it's probably best to let the market figure itself out and be mindful of the headwinds.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:There is optimism but signs of concern. The market has to figure itself out. A further downturn is possible, but I don’t think that a decline above ~20%, leading to a bear market, will happen any time soon.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Nasdaq- Another Buyable Dip?Figure 2- Nasdaq Composite Index $COMPThe last time I switched my Nasdaq call to a BUY on Feb 24 , that worked out very well. I will use the same criteria again for the Nasdaq as the market figures out bond yields: The RSI and the 13000 support level. I need the Nasdaq’s RSI to dip below 40 while also falling below 13000 before buying.We’re not quite there. This is an excellent dip, but it’s really only one down day and its worst down day in weeks. I think we may have some more buying opportunities next week if bond yields pop due to Jay Powell’s testimony. I mean, it seemingly always happens after he speaks.Pay very close attention to the index and its swings.If the tech sector takes another big dip, don’t get scared, don’t time the market, monitor the trends I mentioned and look for selective buying opportunities. If we hit my buying criteria, selectively look into high-quality companies and emerging disruptive sub-sectors such as cloud computing, e-commerce, and fintech.HOLD, and let the RSI and 13000-support level guide your Nasdaq decisions. See what happens over subsequent sessions, research emerging tech sectors and high-quality companies, and consider buying that next big dip.For an ETF that attempts to correlate with the performance of the NASDAQ directly, the Invesco QQQ ETF (QQQ) is a good option.For more of my thoughts on the market, such as a potentially overbought Dow Jones, small-caps, inflation, and emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

End of the month and first quarter of 2021. Is time going fast or slow? Markets have been moving at a dizzying pace to start the year.As a side note, this will be our last newsletter for this week because the market is closed on Friday (Apr. 2).The first quarter of 2021 is officially almost finished. Time flies when you’re having fun, right? While a broad correction did not happen by now, as I expected, the Nasdaq did enter correction territory twice since February. Despite the Nasdaq’s muted moves on Tuesday (Mar. 30), it’s right on the edge of its third foray into correction territory.The market themes remain. There is still as much uncertainty for tech stocks today as there were at the start of March. Until there’s some clarity on inflation and bond yields, I can’t foresee this ending anytime soon.Consider this too. President Biden is about to unveil a $2 trillion infrastructure plan during Wednesday’s session (wasn’t it supposed to be $3 trillion?). While this is great for America’s crumbling infrastructure, let’s be honest- does this economy, while recovering, need anymore spending?Plus, how do you think he will pay for this? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. The market may have priced in a lot of optimism. It may have already priced in some pessimism from potential inflation. But one thing it has not priced in is a possible tax hike.This concerns me.Rising bond yields + Rising taxes= A double whammy of bad news for tech stocks.However, despite the “what ifs,” for now, three pillars remain in motion as a strong backdrop for stocks:VaccinesDovish monetary policy full of stimulusFinancial aidMy goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:The market has to figure itself out.More volatility is likely, and we could experience more muted gains than what we’ve come to know over the last year. Inflation, interest-rate worries, and the potential for tax hikes should be the primary tailwinds. However, a decline above ~20%, leading to a bear market, appears unlikely for now.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Time to Pounce?Figure 1- iShares Russell 2000 ETF (IWM)The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.I kicked myself for not calling BUY on the Russell after it saw a minor downturn during the second half of February. I wasn’t going to make that mistake again.After the iShares Russell 2000 ETF (IWM) went on its latest rally to start March, I checked out the chart. I noticed that almost every time it touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to Tuesday (Mar. 23). The Russell 2000 saw its worst day since February 25, dropped below its 50-day, and I switched the call to a BUY.Now, as we start the final week in March, we may be looking at the 6th reversal after dipping below its 50-day. The IWM has been up about 3% since March 24.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.Consider this too. The Russell is on track for its first losing month in almost five months. According to the chart, it may have also found double-bottom support.Based on macro-level tailwinds, its first losing month in five, potentially finding double-bottom support, its RSI, and where it is in relation to the 50-day moving average, I feel that this is a solid time to BUY.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

In keeping with its historical performance, April has started off white-hot. We ended March, and Q1 for that matter, with more questions than answers.But April 2021 started with a blowout jobs report, and the indices haven't looked back since. Right now, the S&P 500 is at yet another record, the Dow is just about at a record, and we've seen a furious comeback for Big Tech and growth stocks.The sentiment is certainly better now than it was just a couple of weeks ago. However, I implore you to remember that every month in 2021 thus far has started off hot and saw a pullback/volatility occur in the second half of the month.Think about it. In January, we had the GameStop trade spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won't just disappear because we want them to. If we could make things magically disappear, COVID would've been over yesterday.But, as I mentioned before, April historically is a strong month for stocks. According to Ryan Detrick , chief market strategist at LPL Financial, "Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April."During April, the S&P 500 has gained in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.The market concerns, though, are still intact. We still have to worry about inflation, bond yields, and stocks peaking. According to Binky Chadha , Deutsche Bank's chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months.Another thing I'm a bit concerned about is the $2 trillion infrastructure plan. While this is great for America's crumbling infrastructure, do we really need to spend any more trillions?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it's still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We're hot right now.However, we could see more volatility and more muted gains than what we've come to know over the last year.April is historically strong, but please continue to monitor inflation, yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. Russell 2000- Still Buyable?Figure 1- iShares Russell 2000 ETF (IWM)I proudly switched my call on the iShares Russell 2000 ETF (IWM) to a BUY on March 24. I kicked myself for not calling BUY on the Russell after seeing a minor downturn during the second half of February and swore I wouldn’t make that mistake again.We’re up to over 5% since then.The climate right now supports the Russell 2000. The current economic policy is tailor-made for small-caps. The best part, though? The Russell is still very buyable.The RSI is still hovering around 50. I also checked out the chart and noticed that almost every time the IWM touched or minorly declined below its 50-day moving average, it reversed.Excluding the recovery in April from last year’s crash, 5 out of the previous 6 times the Russell did this with its 50-day, it saw a sharp reversal. The only time it didn’t was in October 2020, when the distance between its 50-day and its 200-day moving average was a lot more narrow.Fast forward to now. The Russell 2000, despite its gains since tanking on March 23, remains right at about its 50-day moving average.Aggressive stimulus, friendly policies, and a reopening world bode well for small-caps in 2021. I think this is something you have to consider for the Russell 2000 and maybe overpay for.According to the chart, we may have found double-bottom support too.Based on the chart and macro-level tailwinds, I feel that you can still BUY this index. In fact, it may be the most buyable of them all.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

“Other than my Cincinnati Bengals breaking my heart, few things are more consistent than stocks higher in April.”As a stock nerd and NFL fan, I love this quote from Ryan Detrick , the chief market strategist at LPL Financial.Historically in April, the S&P 500 has seen gains in 14 of the past 15 years. April has also been the strongest month for stocks over the past 20 years.April 2021 has been no exception. Although March, and Q1, for that matter, ended with more questions than answers, this month has been nothing but white-hot.The month kicked off with a blowout jobs report. It then continued with two consecutive weeks of jobless claims crushing estimates, retail sales coming in almost ⅓ higher than projected, and bank earnings blowing past forecasts. The Dow Jones and S&P 500 seemingly hit fresh record-highs every other day, and despite complications with JnJ’s one-dose vaccine, all signs point towards our life returning to normal by this summer.While optimism is high right now, I implore you to remain cautious. I’m really not sure how much higher the Dow and S&P can go without pulling back somewhat. Not to mention, it still has not been smooth sailing for Cathie Wood stocks or SPACs for the last two months either. This rotation into recovery names is very real.Remember that every month in 2021 thus far has started off hot and saw a pullback and volatility occur by the second half of the month.We are now officially in the latter half of April. Although, as I said, April is historically a strong performing month, think about this. By the second half of January, we had Reddit trades spooking investors. In February and March, we had surging bond yields, inflation fears, or Jay Powell comments that rubbed people the wrong way. These concerns won’t just disappear because we want them to. If we could make things magically disappear, COVID would’ve been over yesterday.According to Binky Chadha , Deutsche Bank’s chief U.S. equity strategist, we could see a significant pullback between 6% and 10% over the next three months because of potentially full valuations and inflation fears. Even if this $2 trillion infrastructure plan doesn’t pass in full, do we really need to spend any more trillions with an economy starting to turn red hot?Plus, how do you think this will be paid for? Hiking taxes- namely corporate taxes . Those gains that high growth stocks saw after Trump cut corporate taxes in 2017 could very well go away. While President Biden has indicated a willingness to negotiate his 28% corporate tax proposal, it’s still a tax hike.My goal for these updates is to educate you, give you ideas, and help you manage money like I did when I was pressing the buy and sell buttons for $600+ million in assets. I left that career to pursue one to help people who needed help instead of the ultra-high net worth.With that said, to sum it up:We’re hot right now.However, we could see more volatility and more muted gains than what we’ve come to know over the last year.April is historically strong, but please monitor overvaluation, inflation, bond yields, and potential tax hikes. Be optimistic but realistic. A decline above ~20%, leading to a bear market, appears unlikely. Yet, we could eventually see a minor pullback by the summer, as Deutsche Bank said.Hopefully, you find my insights enlightening. I welcome your thoughts and questions and wish you the best of luck. The Dow Jones- How Much Higher Could We Go?Figure 1- Dow Jones Industrial Average $INDUThe Dow Jones remains red hot in 2021. Strong bank earnings, a recovering economy, and the potential for further infrastructure spending have sent the index to record highs in what seems to be every other day. Unfortunately, we are nowhere close to buyable any longer and are firmly overbought with an RSI over 72.For the longest time, I’ve said to HOLD the Dow and let the gains ride. Now, I think it’s an excellent time to trim and take profits. Many analysts believe the index could end the year at 35,000 or higher, and the wheels are still in motion for that to happen. The problem, though? We’re above 34,000, and we’re only in mid-April.You could do a heck of a lot better for a buyable entry point.Having Dow exposure is valuable. The index has many strong recovery cyclical plays that should benefit from what appears to be an economic recovery and reopening going even better than expected. The Dow could also be quite beneficial as a hedge against volatile growth stocks and SPACs. You won’t see bond yields spooking this index as much.But at this level, it’s probably better to SELL and consider trimming profits.For an ETF that aims to correlate with the Dow’s performance, the SPDR Dow Jones ETF (DIA) is a great option.For more of my thoughts on the market, such as tech, inflation fears, and why I love emerging market opportunities, sign up for my premium analysis today.Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter - it's absolutely free and if you don't like it, you can unsubscribe with just 2 clicks. If you sign up today, you'll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!Thank you.Matthew Levy, CFA Stock Trading Strategist Sunshine Profits: Effective Investment through Diligence & Care* * * * *All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits' employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

USDCHF tanks to new lowsThe US dollar falls as higher continuing jobless claims point to volatility in the labour market. The bearish MA cross from the daily chart is a reminder of the US dollar’s weakness across the board.The latest consolidation has ended up with a breakout below 0.9110 in continuation of the downtrend. As the RSI shows an oversold situation, profit-taking could lead to a short rebound towards the resistance at 0.9145.However, this might turn out to be a dead cat bounce if trend followers seize it as an opportunity to sell into strength. 0.9020 would be the next target in the next round of sell-off.GBPUSD consolidates recent gainsSterling found support after the BoE raised its forecast for Britain’s economy and hinted at reducing its stimulus programme.The bullish MA cross on the daily chart may give buyers an edge as the price action wraps up its sideways action. A confirmation may come in with a breakout above 1.3960.Strong momentum above the psychological level of 1.4000 could prompt short-term sellers to bail out. This would resume the pair’s upward trajectory.On the downside, the demand zone between 1.3800 and 1.3840 is of interest for those wishing to bet against a soft greenback.US 30 extends all-time highThe Dow extended gains to an all-time high as investors rebalance assets away from over-stretched growth stocks.The index continues to grind higher along the 20-day moving average as a sign of optimism.Following its breakout above the 33700-34250 range, buyers seem to have regained control of the price action. A runaway rally gained traction after sellers closed their positions when it was still cheap to do so.An overbought RSI may suggest a temporary pullback. 34200 is the immediate support in case of a pullback. Further down, 33770 would be a critical level to maintain the short-term bullish fever.

GBPUSD turns bearishThe sterling struggles to stabilize as the UK braces for a fuel supply shock.After three months of sideways action, the break below the daily support at 1.3600 could be the confirmation that the pound has sunk into a downtrend.Strong momentum suggests that those who bought the dips had to bail out. 1.3300 is the next target.A deeply oversold RSI would cause a limited rebound when short-term sellers take profit. 1.3550 is likely to cap the bounce with bears waiting to sell into strength.NAS 100 tests crucial supportThe Nasdaq 100 tumbles as surging bond yields weigh on growth stocks.The retest of the demand zone around 14750 from the daily chart has put the bulls under pressure. The break below 14850 has invalidated last week’s rebound, raising the odds for another round of sell-off.The RSI’s double-dip into the oversold area has offered some temporary respite. However, unless buyers can lift 15220, a rebound would be an opportunity to sell. Below the said critical floor, the index could be vulnerable to a plunge towards 14500.USOIL seeks supportWTI crude dipped after the EIA reported an increase in US inventories.The rally has met stiff selling pressure near July’s high (77.00). The RSI’s bearish divergence signaled a halt in the upward momentum.Then a combination of profit-taking and fresh selling has pushed the price below the first support at 75.20. A bearish MA cross also points to a U-turn.A pullback is necessary to let the bulls catch their breath. The resistance-turned-support at 73.00 would be a key level to keep the sentiment unscathed.

UK jobless claims (Tuesday 18:00 AEDT) and Oct CPI (Wed 18:00 AEDT) New home prices (today at 12:30 AEDT), Retail sales, industrial production, fixed-asset investment, property investment (all today 13:00 aedt) Aussie Q3 wage data (Wed 11:30 AEDT) RBA gov Lowe speaks (Tues 13:30 AEDT) US retail sales (Wed 00:30 AEDT), Fed speeches all week with the highlight vice-chair Clarida (Sat 04:15 AEDT) The inflation debate is still the hottest ticket in town – it is promoting higher volatility (vol) in rates markets and bonds, with a small pick-up seen in FX volatility (vol). Equity markets are still, however, calm, with the VIX at 16.3% with falling demand to hedge potential drawdown. This divergence in implied vol across asset class remains a key talking point, but there is no doubt that the boat is not yet tipping with correlations among stocks almost at zero, and cyclical sectors (of the S&P500) still holding up well vs defensives. If the US high yield credit spread accelerated above 273bp above the US 10yr Treasury (currently 267bp), then again, I think equities would be a better sell.  Now this dynamic may change, especially if the debt ceiling comes into play in mid-Dec…but what are the signs to look for over a medium-term?  A higher vol regime will make conditions far more prosperous for equity short-sellers and change the dynamics in FX markets, with renewed downside demand for high beta FX (AUD, NZD, CAD, and MXN). The USD will turn from one being driven by pro-cyclical forces – i.e. relative economics and rate settings - to one sought for safe-haven demand, with the JPY also benefiting.  (Implied volatility benchmarks across asset class) Firstly, I would start with the rates markets – we can see a bit over 2 hikes priced into US fed funds future by the end-2022, with rates ‘lift off’ starting in July. I think if we priced in over 3 hikes in 2022 it could become more problematic for risk assets. Looking out the Eurodollar rates curve, we see a reasonably aggressive pace of hikes in 2022 and 2023, but then the pace markedly declines with barely anything priced for 2024 and 2025. In essence, the market sees hikes as front-loaded suggesting the Fed are in fact not dramatically behind the curve – a factor that is one of the core debates in macro.  We see an 89bp differential between the Eurodollar Dec 2025 and Dec 2022 futures contracts – if this moves back to say 140bp then this could be the market feeling that inflation is going to be a far greater problem and rate hikes are being more aggressively priced throughout the next four years. (Orange – US 5y5y forward rate, white – Fed’s long-term dot plot projection) Also, if the US 5y5y forward rate (the markets view on the ‘terminal’ fed funds rate – now 1.94%) pushed above 2.50% (the Fed’s long-term dot plot projection), again, I think this would be a trigger for far higher volatility and risk aversion.  A move to 2.50% won't play out overnight, if at all, and we’ll need to see real evidence that the US labour force participation rate is not going above 62%, while unit labour costs stay elevated and supply chains heal at a glacial pace. However, if the forward rate was eyeing 2.5% I think this could be a factor many strategists will point to for the VIX to sustain a move above 20%. The gold market is perhaps one of the more classic signs of inflationary concerns – this is a play on US ‘real’ (adjusted for inflation expectations) rates though, where the combination of a better economy in Q4, record negative US real rates and rising inflation is one the gold bulls will seek out precious metals. The Fed may need to promote a move higher in real rates, but the knock-on effect is they risk the stock market finding sellers – notably in growth stocks. A downside break of -2% in 5yr US real Treasury’s could be the trigger for gold to push into and above $1900.  Many debate the linkage between inflation expectations and the real economy. I’m not sure it matters when people are feeling the effects for themselves, and much has been made of the recent NFIB small business survey and Friday’s University of Michigan consumer sentiment survey, which hit the lowest levels since August 2011.  Clearly inflation is not popular and is increasingly the key political issue – I’d argue if real rates break to new lows this could accelerate inflation hedges, while a move through 2.7% in US 5y5y inflation swaps (currently 2.55%) would also play into the idea that perhaps the Fed, at the very least, need to radically reduce the pace of QE in the December FOMC meeting.  Clearly, the US Nov CPI (released 11 Dec) is going to be a big event for markets to digest and the signs are price pressures will continue to build from the current 6.2% YoY pace.  Crude and gasoline also play a key role in shaping sentiment – Senate Majority Leader Schumer has called on President Biden to release an element of the US’s Strategic Petroleum Reserves (SPR). This is a factor that has been talked up since OPEC rejected the US’s calls to increase output by more than 400k barrels. However, the introduction of Schumer into the mix just adds fuel to the fire and this may weigh on crude. So, a few indictors I am watching that could spur the market into a belief the Fed are genuinely behind the curve – I’d argue the market isn’t there yet, but if the factors I mention don’t show evidence of dissipating then we could see forward rates move to levels that could highlight the Fed need to act far more intently – that is where risk dynamics could markedly change.

The S&P500 ChartStorm is a selection of 10 charts which I hand pick from around the web and post on Twitter. The purpose of this post is to add extra color and commentary around the charts. The charts focus on the S&P500 (US equities); and the various forces and factors that influence the outlook - with the aim of bringing insight and perspective. Hope you enjoy! p.s. if you haven’t already, subscribe (free) to receive the ChartStorm direct to your inbox, so you don’t miss out on any charts (you never know which one could change the whole perspective!) Subscribe Now 1. S&P 500 Seasonality Chart: It’s everyone’s favorite chart updated again (maybe for the last time this year?). The S&P500 has been sticking to the seasonality script through most of this year… makes me think about Murphy’s Law tho - maybe the market will start to improvise and go off-script? Either way, the next few weeks seasonally look like sideways action. Source: @topdowncharts 2. Volatility Seasonality: A twist on the previous chart — same concept, but this time with implied volatility. I find it interesting to note that the VIX has actually been a bit lower than usual for this time of the year (and trending up short-term…). One last VIX spike before year-end? Source: @topdowncharts 3. Stockmarket Statistics: What happens after the market goes up a “crazy overheated” 20%+ over the course of a year? More Gains. Historically most of the time if the market closed up 20%+ for the year, the next year was also positive (84% of the time). As of writing, the market is up some 27% YTD (albeit, this year ain't over yet!). Source: @RyanDetrick 4. Bad Breadth? Fully 1/3rd of stocks are in a downtrend. (defined as trading below their respective 200dma) Will this bearish divergence be a problem? Source: Index Indicators 5. GAARP vs GAAAP: On this metric, growth stocks are the most expensive ever vs value stocks. So it begs the question… Growth at a reasonable price? or Growth at *any* price? (but then again, who defines what "reasonable" is in a market like this!) Source: @TheOneDave 6. Low Energy: Energy stocks are attempting to turn the corner vs the rest of the market, but face high hurdles from the raging tech bull market, rise of ESG investing and regulatory/political hurdles, not to mention commodity market volatility. What comes down must go up? (or something else?) Source: @dissectmarkets 7. Buybacks Back: New all-time high for buybacks in Q3 (with 95% reported). Always makes me wonder these trends — you see the majority of buybacks occurring near market peaks… i.e. when valuations are extreme expensive. The opposite of value investing: buy more when its expensive, buy less when it’s cheap — seems like upside-down logic to me, but then again I am a simple man. Source: @hsilverb 8. Payout Ratio: As an interesting follow-on to the ATH in buybacks/dividends, it’s interesting to note that the dividend payout ratio is actually below average... Scope to return more cash to investors? Source: @ChrisDagnes 9. Buffett Indicator: Looks like this indicator has reached a permanently higher plateau! (kidding of course - echoing the famous last words of Irving Fisher back in 1929) Interesting stat to note: to make this indicator as cheap as where it got to during the financial crisis lows the market would need to fall over 70%. Definitely not a prediction, but interesting nonetheless. I would say I have multiple quibbles with this indicator, I think CAPE and ERP are better valuation metrics, but that’s a topic for another day. Source: @KailashConcepts 10. Buffett the Compounder: Speaking of Buffett, a lesson in compounding. Source: @DividendGrowth Thanks for following, I appreciate your interest! !! BONUS CHART: total stockmarket leverage >> Click through to the ChartStorm Substack to see the bonus chart section https://chartstorm.substack.com/p/weekly-s-and-p500-chartstorm-21-november                   Follow us on: Substack https://topdowncharts.substack.com/ LinkedIn https://www.linkedin.com/company/topdown-charts Twitter http://www.twitter.com/topdowncharts

Summary:  Interest rate sensitivity came back roaring yesterday pushing down all of our growth baskets. Yesterday's move shows the potential for a correction in US technology stocks should the US 10-year yield continue to rapidly advance towards the highs from March. We also show how the Nasdaq 100 and STOXX 600 move in opposite direction during large up or down days in the US 10-year yield. Growth baskets look awfully vulnerable Yesterday’s move in the US 10-year yield of 8 basis points made it the 10th biggest move higher in US yields this year. Back in March when technology stocks were under pressure we wrote a lot about interest rate sensitivity in growth stocks as their present value are derived from expected cash flows further into the future than the typical MSCI World company. If interest rates rise faster than future growth expectations then the net effect is negative on the present value and more so for growth stocks as they have a higher duration. We saw downside beta (higher sensitivity) in all of our growth equity baskets with the gaming basket down 2.3% and the worst performers being the E-commerce and Crypto & Blockchain baskets down 4.2% and 5.1% respectively. This tells you a lot about the sensitivity and given the drawdown in technology stocks back in March, we could easily experience a 15-20% drawdown in technology stocks. The local highs from March in the US 10-year yield is the key level to watch for a breakout and a new trading environment. With all the options activity in Tesla dwarfing the combined options activity in FTSE 100 constituents, we believe Tesla will be at the center of the next risk-off move in technology. Nasdaq 100 vs STOXX 600 are yin and yang of interest rates We have previously tried to calculate the interest rate sensitivity, but this time we are pursuing a different approach. We look at the past 231 trading days this year and group the 1-day difference in the US 10-year yield into deciles. In order to measure interest rate sensitivity we calculate daily excess log returns for Nasdaq 100, S&P 500 and STOXX 600 against the MSCI World Index and compute their average daily excess return for each decile. As the barplot shows, there is significant negative excess return in Nasdaq 100 in the 1st decile (the 10% days with the highest positive difference in US 10-year yield) and significant positive excess return in STOXX 600. This makes perfect sense because Nasdaq 100 is high duration growth stocks and STOXX 600 has a clear value tilt towards financials, energy and mining which exhibit much lower duration. The pattern is completely reversed in the 10th decline (days with large negative difference in US 10-year yield). The other eight deciles do not show the same clear spread between Nasdaq 100 and STOXX 600. In other words, if interest rates suddenly move aggressively higher then growth portfolio will take a serious hit and hence why we recommend investors to improve the balance between growth and value stocks, or said differently reduce the equity duration.

Why Consider Dividend Growth Investing? Dividend growth investing is increasingly popular in the US and worldwide. The concept is simple and easy to understand. An investor buys a basket of stocks that annually increases the dividend. This strategy is a long-term buy-and-hold strategy. In contrast, it is the opposite of a trading strategy where an investor rapidly buys and sells stocks. Some investors think of dividend stocks as something that only retirees buy for income. However, some of the largest tech companies pay dividends, including Apple (APPL) and Microsoft (MSFT). Hence, investors can buy growth stocks that also pay a growing dividend. Why Dividends? Do dividends matter to investors? The short answer is yes for a few reasons. First, over time, stocks that pay dividends tend to outperform ones that don't pay dividends with lower volatility as measured by beta. The difference in total return is even more significant for comparing stocks that pay growing dividends and stocks that don’t pay dividends. Furthermore, research has shown that dividend and dividend growth stocks significantly outperform stocks that cut or eliminate dividends. The reason for this is that companies that cut or eliminate dividends are often performing poorly. In some cases, this poor performance is due to changing economic conditions. For instance, energy companies performed poorly in 2020 due to the COVID-19 pandemic. Lower revenue and earnings caused many energy companies to stop paying a dividend. However, in many cases, it is because the company is facing increasing competition or changing technology. For example, Kodak's core technology was film, and digital cameras and smartphones made film obsolete. Another reason why dividends matter is dividends can be used to determine valuation. An estimate of a fair value can be calculated using the dividend per share and the expected constant growth rate. Dividends also indicate if the company is doing poorly or well since cash must be used to pay the dividend. Research has also shown that dividend stocks perform better than non-dividend-paying stocks in down markets. Types of Companies Not all companies pay a dividend or a growing dividend. In the US, there are over 6,000 stocks listed on stock market exchanges. Of these, more than 3,500 pay a dividend, and only about several hundred pay a growing dividend for 5+ years. The fact points to the difficulty a company has for growing the dividend over a more extended period. There are lists of companies that pay a dividend for extended periods. One group of stocks that are well known as dividend growth stocks are the Dividend Aristocrats. The stocks on this list have raised the dividend for 25+ years. In addition, the stocks must meet other criteria, including being a member of the S&P 500 Index and having a market capitalization of $3 billion or more. Currently, there are 65 stocks on the Dividend Aristocrats list. Investors can buy the individual stocks or buy an exchange-traded fund (ETF) that owns the entire list. A Top Dividend King Today An even more exclusive club of dividend growth stocks is the Dividend Kings 2021 list. These are stocks that have paid a growing dividend for 50+ years. There are only 32 stocks on this list. It is challenging for a company to raise the dividend for 50 or more years. Typically, a company must have a substantial competitive advantage to overcome economic cycles and competition. One top Dividend King today is Johnson & Johnson (JNJ). The company is a global healthcare company with three primary business segments: Consumer Health, Pharmaceutical, and Medical Devices. Most investors know the company through its consumer health business. Major brands include Band-Aid, Neosporin, Tylenol, Zyrtec, Sudafed, Motrin, Benadryl, Pepcid, Listerine, Aveeno, Neutrogena, Stayfree, Carefree, o.b., and Clean & Clear. However, Johnson & Johnson's other two segments are much larger. For example, some of the drugs that Johnson & Johnson sells are blockbusters, with over $1 billion annually in sales. Johnson & Johnson’s stock price is relatively flat for the year, with a gain of ~3.5% year-to-date. However, results impacted by COVID-19 have pressured the stock price. In addition, Johnson & Johnson is faced with lawsuit risks from opioids and talcum powder that are also pressuring the stock price. The current quarterly dividend rate is $1.06 per share for an annual rate of $4.24 per share. The forward dividend yield is about 2.6%. The company’s dividend is relatively safe. The forward payout ratio is approximately 43%, a good value. Furthermore, Johnson & Johnson is one of two triple-AAA-rated companies from credit agencies. For this reason, Johnson & Johnson is often considered one of the best dividend growth stocks. Johnson & Johnson recently announced that it would split into two companies. The Consumer Health business will be divested, leaving the Pharmaceutical and Medical Device business. Johnson & Johnson will continue to grow organically through R&D and approvals for new medications and indications. The company will also probably buy smaller companies adding to its growing portfolio of products. Market Capitalization: $428.82 billion Stock Price: $162.89 Dividend Yield: 2.6% Payout Ratio: 43.3% Summary Dividend growth stocks should be considered by all investors, not just those in retirement. The reason is that they can provide excellent long-term returns with lower volatility. There are hundreds of stocks to pick from using this investment strategy, including many well-known ones. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 3% out of over 8,116 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 

Equities 2021-11-24 13:00 6 minutes to read Summary:  The last two trading days US technology stocks have been impacted by rising interest rates and rising market expectations of Fed rate hikes next year. US technology stocks have interest rate sensitivity due to their high equity valuation, but several other key equity markets such as Netherlands, New Zealand, Singapore, Switzerland, and Denmark are also having high equity valuation and thus high duration. These equity markets would likely underperform next year if the interest rates move considerably higher. In yesterday’s equity note, we showed how Nasdaq 100 and STOXX 600 are the yin and yang of interest rate sensitivity based on equity market reaction this year with Nasdaq 100 underperforming significantly when the US 10-year yield has a large increase. But outside these two major equity indices, investors felt what higher interest rates can do to sentiment. Danish equities were down 3% in its worst day since March 2020 during the panic days of the pandemic and Dutch equities were down 3.1%. What do these two markets have in common? They both have equity valuations that are well above many other markets, which simplistically can be translated into higher duration which means that these equity markets are more sensitive to big changes in interest rates. Why is that? Because high equity valuation implies that a larger part of the present value comes from the terminal value on cash flows (meaning way into the future) and this value is more sensitive to the discount rate. Dutch equities are the most expensive of 26 equity markets in the developed and emerging markets with a 12-month forward EV/EBITDA of 23.3x with Denmark and Switzerland less frothy at 14.3x and 14.7x respectively. If we exclude Australia, India, New Zealand and Singapore from yesterday’s market reaction because of the time delay to the US session then we do observe that equity markets with high equity valuations were hit harder yesterday confirming that we did observe a repricing related to a larger move in interest rates. It is all related to the value vs growth trade which is essentially STOXX 600 vs Nasdaq 100, but which can also be expressed between individual equity indices such as Norway vs Denmark. The main point of yesterday’s equity note and today’s observations is that we have a group of equity markets such as Netherlands, New Zealand, Singapore, USA, Switzerland, and Denmark that are in the high equity valuation group. These markets have higher interest rate sensitivity and would likely underperform in a rising interest rate environment and exacerbated if flows also favour value over growth. In our view the equity market is telling investors that tail risks are rising for high duration equities and in order to mitigate this investors should begin balancing their portfolios better between high valued growth stocks and value stocks such as energy, financials, and mining companies. Appendix: 5-year charts of OMXC25 (Danish equities) and AEX (Dutch equities)

Equities 2021-12-03 14:15 7 minutes to readSummary:  As we have written about in several equity notes, the bubble stocks segment has been under enormous pressure this year and in recent weeks the destruction in market value has intensified at a blistering pace. The tailwind from the pandemic that has benefitted many technology companies is easing faster than expected and the worsening inflation outlook is making many growth investors wary of the future direction for interest rates which play an important role in equity valuations of growth stocks. We touch on DocuSign and its Q4 revenue miss last night which caused a 30% plunge in its shares underscoring the fragility in growth stocks with high expectations.The fallout in bubble stocks show importance of balanceIn yesterday’s equity note, we discussed bubble stocks and how this group of stocks have been under pressure since February as the pandemic tailwind on growth has eased and the inflation outlook has worsened causing markets to readjust their interest rate outlook. Low interest rates have been the key driver of excessive valuations in this bubble segment and now as the tide is turning investors are readjusting their exposure. As we move into 2022, we will reiterate our view on equities that we like semiconductors, commodity sector, logistics, cyber security, mega caps, financial trading companies (a play on interest rates and volatility), and battery, which most of them are plays on the physical world making a comeback against the digital world. In a rising inflationary environment our preferred themes can make growth portfolio with exposure to bubble stocks more balanced in terms of risk.Momentum crash and Danish equities under pressureLike our bubble basket, Morgan Stanley has their own most crowded stocks basket which has just dropped more than 10% relative to the S&P 500, the most on record since 2013 underscoring the massive destruction that is currently taking place. While Tracy Alloway from Bloomberg calls it a new “quant crisis”, our view is that it is more a classic momentum crash as momentum strategies sitting on fat gains over the past 18 months are drastically reducing positions. When we reach the bottom is very uncertain but if we are in a momentum crash then it is the illiquidity that drives the explosive price action.Source: TwitterIn our recent string of equity notes on interest rate sensitivity and bubble stocks we also mentioned Danish equities as being interest rate sensitive together with other equity markets such as the Netherlands, Switzerland, United States, and India. But given the recent weeks price action it seems there is an overlap to the bubble stocks selloff suggesting the readjustments in equities are more profound. Source: Saxo GroupDocuSign shares plunging 30% show fragility for growth stocksAnother sign of the stress in the bubble stocks segment of the equity market is the 30% plunge in DocuSign, the leader in electronic signature, following a Q4 (ending 31 January 2022) revenue guidance missing estimates; the revenue guidance was $557-563mn vs est. $574mn. The price reaction shows how fragile these stocks are to a small change in revenue expectations and clearly the risks associated with bubble stocks. We should point out, that DocuSign does not fit all criteria for being added to our bubble stocks basket because the 12-month forward earnings expectations are positive whereas we require those to be negative to be called a bubble stock. The revenue miss has caused sell-side analysts to drastically cut the median price target to $275 from around previously $330 against a close of $164 in extended trading yesterday.Source: BloombergSource: Saxo Group

Macro 2021-12-06 08:45 6 minutes to read Summary:  Friday saw global markets weakening again in another violent direction change from the action of the prior day. With futures for the broader US indices up this morning, the damage is somewhat contained, even if nerves are ragged. At the weekend, cryptocurrencies suffered a major setback in what looked like a run on leveraged positions that erased 20 percent or more of the market cap of many coins before a bit more than half of the plunge was erased with a subsequent bounce. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - despite the US 10-year yield pushed lower on Friday on the string of strong macro numbers, Nasdaq 100 futures are oddly weak in early European trading hours sitting around the 15,700 price level. The 100-day moving average down at 15,400 is the key price level to watch should the weakness in US technology and bubble stocks continue today. We see clear exposure overlap between cryptocurrencies and growth stocks, and with the steep plunge in Bitcoin over the weekend the risk-off might not be over. Stoxx 50 (EU50.I) - Stoxx 50 futures continue to be in a tight trading range sitting just above the 4,100 level this morning with little direction as traders are still digesting the US labour market report and Omicron news which at the margin seems to be improving somewhat, although expectations are still that jet fuel demand will be impacted. The weaker EUR is also short-term helping some of the exporters in Europe and generally leading to positive sentiment in early trading with European equities up 1%. USDJPY and JPY crosses – USDJPY closed the week near 112.50-75 support that was tested multiple times last week, but is once again rebounding overnight, while JPY crosses elsewhere continue to trade heavily, with the likes of AUDJPY, a traditional risk proxy, cementing the reversal back lower and GBPJPY closing the week near a significant zone of support into 148.50-149.00. Safe haven seeking in US treasuries at the long end of the curve are the key coincident indicator driving the JPY higher, with Friday’s weak risk sentiment driving fresh local lows in US long yields, with the 30-year T-bond yield at its lowest since January, below 1.75%. AUDUSD – the AUDUSD slide accelerated Friday in what looks like a capitulation ahead of tonight’s RBA meeting, where the feeling may be that there is a high bar for a surprise, given that the RBA has declared it would like to wait for the February meeting before providing guidance on its ongoing QE. Weak risk sentiment and uninspiring price action in commodities (with the partial exception of the very important iron ore price for the Aussie recently) are weighing and the price action has taken the AUDUSD pair to the pivotal 0.7000 level, an important zone of support and resistance both before and after the pandemic outbreak early last year. Crude oil (OILUKFEB22 & OILUSJAN21) trades higher following its longest stretch of weekly declines since 2018. Today’s rise apart from a general positive risk sentiment in Asia has been supported by Saudi Arabia’s decision to hike their official selling prices (OSP) to Asia and US next month. Thereby signaling confidence demand will be strong enough to absorb last week's OPEC+ production increase at a time when mobility is challenged by the omicron virus. For now, both WTI and Brent continue to find resistance at their 200-day moving averages, currently at $69.50 and $72.88 respectively. Speculators cut bullish oil bets to a one-year low in the week to November 30, potentially setting the market up for a speculative-driven recovery once the technical outlook turns more friendly. US natural gas (NATGASUSJAN22) extended a dramatic collapse on Monday with the price down by 7% to a three-month low at $3.84 per MMBtu, a loss of 31% in just six trading day. Forecasts for warmer weather across the country have reduced the outlook for demand at a time where production is up 6.3% on the year. A far cry from the tight situation witnessed in Europe where the equivalent Dutch TTF one-month benchmark on Friday closed at $29.50 while in Asia the Japan Korea LNG benchmark closed at $34. Gold (XAUUSD) received a small bid on Friday following the mixed US labor market report, but overall, it continues to lack the momentum needed to challenge an area of resistance just above $1790 where both the 50- and 200-day moving averages meet. Focus on Friday’s US CPI data with the gold market struggling to respond to rising inflation as it could speed up rate hike expectations, leading to rising real yields. A full 25 basis point rate hike has now been priced in for July and the short-term direction will likely be determined by the ebb and flow of future rate hike expectations. US Treasuries (IEF, TLT). This week traders’ focus is going to be on the US CPI numbers coming out on Friday, which could put pressure on the Federal Reserve to accelerate tapering as the YoY inflation is expected to rise to 6.7%. Yet, breakeven rates started to fall amid a drop in commodity prices, indicating that the market believes that inflation is near peaking despite we are just entering winter. It is likely we will continue to see the yield curve bear flattening, as the short part for the yield curve is adjusting to the expectations of more aggressive monetary policies, and long-term yields are dropping as economic growth is expected to slow down amid a decrease in monetary stimulus and the omicron variant. Last week, the 2s10s spread suffered the largest drop since 2012 falling to 74bps. The 5s30s spread dropped to 53bps. What is going on? COT on commodities in week to November 30. Hedge funds responded to heightened growth and demand concerns related to the omicron virus, and the potential faster pace of US tapering, by cutting their net long across 24 major commodity futures by 17% to a 15-month low. This the biggest one-week reduction since the first round of Covid-19 panic in February last year helped send the Bloomberg Commodity index down by 7%. The hardest hit was the energy sector with the net long in WTI and Brent crude oil falling to a one year low. Following weeks of strong buying, the agriculture sector also ended up in the firing line with broad selling being led by corn, soybeans, sugar and cocoa. Evergrande plunges 16% to new low for the cycle. The situation among Chinese real estate developers is getting more tense with Evergrande’s chairman being summoned by Guangdong government on Friday as the company is planning a larger restructuring with its offshore creditors. The PBOC has said that they are working with the local government to defuse risk from a restructuring and the regulator CSRC said over the weekend that risks into capital markets are manageable. This week another real estate developer Kaisa Group is facing a deadline on debt which will be critical for the Chinese credit market. US Friday data recap: Services sector on fire, November jobs report stronger than headlines suggest. The November ISM Services report showed the strongest reading in the history of the survey (dating back to 1997) at 69.1, suggesting a red-hot US services sector, with the Business Activity at a record 74.6, while the employment sub-index improved to 56.5, the highest since April. The November employment data, on the other hand, was somewhat confusing. Payrolls only grew 235k vs. >500k expected, but the “household survey” used to calculate the unemployment rate saw a huge growth in estimated employment, taking the overall employment rate down to 4.2% vs 4.5% expected and 4.6% in October. The Average Hourly Earnings figure rose only 0.3% month-on-month and 4.8% year-on-year, lower than the 0.4%/5.0% expected, though the Average Weekly Hours data point ticked up to 34.8 from 34.7, increasing the denominator. Twitter sees exodus of leaders. Part of Jack Dorsey stepping down as CEO at Twitter is a restructuring of the leadership group which has seen two significant technology leaders at engineering and design & research steeping down. The new CEO Agrawal is setting up his own team for Twitter which if done right could make a big positive impact on the product going forward. What are we watching next? Study of omicron variant and its virulence, new covid treatment options. Discovery of omicron cases is rising rapidly, with some anecdotal hopes that the virulence of the new variant is not high, but with significant more data needed for a clearer picture to emerge. Meanwhile, a new covid treatment pill from Merck (molnupiravir) may be available in coming weeks in some countries as it nears full approval. Next week’s earnings: The earnings season is running on fumes now few fewer important earnings left to watch. The Q3 earnings season has shown that US equities remain the strongest part of the market driven by its high growth technology sector. Today’s focus is on MongoDB which is expected to deliver 36% y/y revenue growth in Q3 (ending 31 October). Monday: Sino Pharmaceutical, Acciona Energias, MongoDB, Coupa Software, Gitlab Tuesday: SentinelOne, AutoZone, Ashtead Group Wednesday: Huali Industrial Group, GalaxyCore, Kabel Deutschland, Dollarama, Brown-Forman, UiPath, GameStop, RH, Campbell Soup Thursday: Sekisui House, Hormel Foods, Costco Wholesale, Oracle, Broadcom, Lululemon Athletica, Chewy, Vail Resorts Friday: Carl Zeiss Meditec Economic calendar highlights for today (times GMT) 0830 – Sweden Riksbank Meeting Minutes 0900 – Switzerland Weekly Sight Deposits 1130 – UK Bank of England’s Broadbent to speak 0330 – Australia RBA Cash Rate Target   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple Spotify Soundcloud Sticher

Equities 2021-12-06 13:30 5 minutes to read Summary:  Our Bubble Stocks and Crypto & Blockchain baskets are the two worst performing baskets this month as these pockets of the market are currently going through a big realignment in terms of expectations. The Fed's new objective of getting inflation under control will accelerate tapering and led to several rate hikes next year. Combined with a significant fiscal drag next year, US growth stocks will be hit by both lower growth and higher discount rate on cash flows, the worst of all combinations. This means that growth stocks that can show a credible upward sloping path on operating margin will fare much better whereas growth stocks that will fail in delivering higher operating margin will experience more trouble. Friday’s price action was not pretty. Despite strong economic figures from the US the 10-year yield declined and normally that would have been a positive for technology stocks, but instead Nasdaq 100 continued lower with our Bubble Stocks and Crypto & Blockchain baskets leading the declines. On Saturday, Bitcoin was down as much as 21.2% at the lows adding to the woes of these pockets of the market. We know from surveys that there is a large overlap in exposure between investors in growth/bubble stocks and cryptocurrencies and that it is people under the age of 35 that dominates the exposure. Source: Saxo GroupThe Crypto & Blockchain basket (see composition below) is down 12.7% in December making it the worst performer and if we see the Fed getting ahead of the curve hiking rates three times next year then it could take more steam out of the crypto industry. The recent high profiled listing of Bakkt through a SPAC is a crypto related company that we will soon release a more thorough analysis of. As the table below also show analysts remain bullish on the industry with a median price target 77% above current prices. The key risk for bubble stocks and crypto related assets this week is the US inflation report on Friday which could accelerate the market’s expectations of tapering and rate hikes if inflationary pressures remain stubbornly high. Name Segment Market Cap (USD mn.) Sales growth (%) Diff to PT (%) YTD return (%) 5yr return Coinbase Global Inc Crypto exchange 57,169 139.3 44.1 NA NA Signature Bank/New York NY Bank 18,487 9.7 22.2 128.2 110.5 MicroStrategy Inc Investment firm 6,896 5.1 38.5 62.4 218.0 Galaxy Digital Holdings Ltd Crypto services 6,245 NA 83.5 128.3 1,213.0 Silvergate Capital Corp Bank 4,364 61.3 32.1 121.0 NA Marathon Digital Holdings Inc Crypto mining 4,274 4,562.5 64.1 298.9 57.7 Bakkt Holdings Inc (*) Digital assets platform 3,354 NA 114.9 29.3 NA Riot Blockchain Inc Crypto mining 3,339 1,497.4 90.3 68.6 659.6 Northern Data AG Infrastructure 2,523 62.7 20.7 26.8 NA Voyager Digital Ltd Crypto broker 2,105 8,169.3 83.1 234.0 NA Monex Group Inc Financial institution 1,827 75.3 50.4 111.2 182.7 Hut 8 Mining Corp Crypto mining 1,553 203.9 102.8 241.8 352.1 Hive Blockchain Technologies Ltd Crypto mining 1,216 395.3 NA 67.4 3,900.0 Bitfarms Ltd/Canada Crypto mining 1,194 7.0 57.0 220.0 NA Canaan Inc Infrastructure 1,040 225.5 NA 2.2 NA Stronghold Digital Mining Inc (*) Crypto mining 872 NA 132.3 NA NA Argo Blockchain PLC Crypto mining 690 131.5 127.5 236.4 NA Coinshares International Ltd (*) Digital asset management 586 NA -7.3 NA NA Bit Digital Inc Crypto mining 571 NA 69.9 -62.4 NA Bitcoin Group SE Crypto broker 236 138.7 187.4 -41.8 626.8 DMG Blockchain Solutions Inc Investment firm 128 2.7 104.1 58.1 1,533.3 Digihost Technology Inc Crypto mining 118 NA NA 100.7 NA Taal Distributed Information Technologies Inc Blockchain platform 105 NA 139.5 49.0 NA Future FinTech Group Inc Blockchain e-commerce 85 2,555.0 NA -35.1 -83.6 Quickbit EU AB Crypto payment services 59 -27.2 NA -18.1 NA Safello Group AB Crypto broker 17 NA NA NA NA Aggregate / median   119,055 135.1 76.5 68.0 352.1 Source: Bloomberg and Saxo Group* Added to theme basket on 29 October 2021** Infrastructure segment means physical computing applications for crypto mining Growth stocks have a profitability problem more than a growth problem The selloff in growth stocks have many liquidity and technical characteristics, and the recent shift by the Fed to focus on getting inflation down is beacon of what to come. The Fed will accelerate its tapering of bond purchases and move more quickly on interest rates which means that the discount rate will go up while growth might face headwinds from higher interest rates and a fiscal drag (the fiscal deficit will shrink in 2022). This is a double whammy for growth stocks. DocuSign’s Q3 earnings release was portrayed as a problem of revenue growth but if you model the company’s shareholder value then you will see that the more sensitive parameter to its implied expectations is its future operating margin. While DocuSign lifted its operating margin to 3.1% for the quarter up from 0.5% in Q2 and -5.2% a year ago, it was still below expectations and that extends the trajectory for improving the operating margin and thus lowers the value of the company. Many growth companies will not have growth trajectories that will differ much from what is implied in current market values, and a downside miss is definitely not the biggest downside trigger on market value. The reality is that growth stocks are priced for high growth and then a hockey stick on operating margin, but if that hockey stick is pushed further out then it has a big impact on market value. The next year will separate growth stocks into two camp. Those that can deliver on expanding their operating margin and those that will fail to do that. 

About 13 months ago, in early November 2020, we saw a shift in the previous months’ investment idea thanks to Biden’s presidential election victory and the emergence of effective and affordable vaccines. Then we saw a investors’ shift from so-called “work from home” companies to the broader market and a strong recovery in energy and financial sector stocks. But the technology sector, which had initially stalled, did not find itself on the margins of the markets either. The trade wore off early this November, and the leading sectors retreated from their peaks. Initially, news of the new omicron strain scared the markets. Still, in recent days some of the fear has dissipated, and there are hopes that the new variant is acting as a light at the end of the tunnel, offering hope that the mutation of the virus has made it less deadly, though many times more infectious. Most importantly, existing vaccines mainly protect people, if not from the disease, then from the severe course of the disease. If the first observations are confirmed, this could prove to be a welcome sigh of relief for the tourism industry, as it dramatically reduces fears of stricter lockdowns. As early as next spring, the coronavirus will not restrict people’s travel and leisure activities in the most optimistic scenario. If so, the following investment idea for the markets could be airline and tourism stocks, which have been at annual lows recently, as the surge of optimism from November last year to March this year quickly deflated. In addition, the markets could finally switch from outperforming growth stocks to value stocks due to the monetary policy reversal in response to inflation. Growth equities have been pulling the market up in all recent years when the Fed has been in a position to stimulate inflation rather than suppress it. Investors favour stocks of companies with a sustainable business model and regular dividends during such periods. These could be the Consumer Staples and Utilities. These sectors lagged last year, adding 2% and 7%, respectively. Possibly, the ‘switch’ we suggest will not be harmful to the Financial sector, which is benefiting from increased lending and rising interest rates. In terms of indices, we see an increased chance that the Nasdaq/Dow ratio, which repeated the highs of the 2000 peak at 0.47, will correct in the coming months. We are not saying that the ratio will return to 0.11, meaning it will lose ¾ of its current values. More sensible at the moment is to expect this ratio to correct to 0.30 in 2022-2023, assuming a 35% fall in the Nasdaq with the Dow Jones unchanged.

Equities 2021-12-08 14:00 8 minutes to read Summary:  Growth and bubble stocks celebrated its best day in nine months yesterday on good news about the Omicron variant, but the true underlying risk in the form of higher interest rates has not gone away. The Fed has acknowledged inflation which will give it less flexibility should tapering cause some wave splash in equities. Interest rate sensitivity will be a key theme in 2022 for equities and especially growth and bubble stocks. For those growth companies that can lift expectations for operating margin trajectory can mitigate the negative impact from higher interest rates, but those growth companies that fail to lift profitability will likely experience a tough 2022. Bubble stocks are back on positive Omicron news It was a blockbuster equity session like we have not seen in nine months with our NextGen Medicine, E-commerce, and Bubble Stocks baskets gaining between 5% and 6.6%. The culprit was of course the continued positive news flow suggesting that the new Covid-19 variant Omicron is less virulent than feared and today Pfizer announced that three shots with their vaccine protect against Omicron. Does that change the overall concern for growth and especially bubble stocks? In our recent equity note Interest rate sensitivity is back in town haunting technology stocks we show quantitatively how the Nasdaq 100 Index (US technology stocks) is significantly more interest rate sensitive than the S&P 500 Index and STOXX 600 Index (see chart below). This interest rate sensitivity is key to understand the underlying risk in growth and especially bubble stocks, and the risk of higher interest rates has gone away. The Fed will have less flexibility this time In fact the Fed has acknowledged that inflationary pressures are more rooted and broad based, and of concern for US households seeing their purchasing power declining. The Fed has three times since early 2013 tried to taper its bond purchases all with negative impact on financial assets. Every time markets hit a big enough pain point, the Fed reversed and restarted quantitative easing. This could be done because inflation expectations were low and well anchored. But fast forward and today’s inflationary outlook is very different and the Fed might not be in a position where it can go back to expanding the balance sheet. Tapering will be accelerated in the coming months and then rate hikes are coming and if the economy or financial markets are deteriorating the Fed might have to remain tight to control inflation. As we have said many times the past couple of months investors must balance their portfolios before the tighter monetary policy cycle kicks properly into gear. Investors should reduce exposure to growth and bubble stocks, while increasing exposure to themes that can provide some cover during inflationary pressures. The themes we think will do well during inflationary periods are mega caps (Microsoft’s recent price hike shows why), semiconductors, logistics, financial trading firms (bet on volatility), cyber security (business necessity), and the commodity sector. The fact that mega caps have reached unimaginable market power and are hugely profitable is bad for the overall economy, but it is likely going act as a cushion for the equity market when interest rates start rising. The chart below shows another important aspect of markets that we need to be aware of. The decade of the 2010s was the best decade in terms of earnings growth adjusted for inflation in the S&P 500 since WWII. It explains the multiple expansion under lower interest rates, but it also explains the rise of passive investing as the rapid earnings growth has lifted all boats. The 2010s is unlikely be repeated in the current decade and a higher inflationary outlook will likely give rise to a different investing climate in equities and active strategies might stage a big comeback. Higher operating margin will differentiate growth stocks in 2022 We recently modeled a growth stock which had a price implied expectation of four years into the future, meaning that the market value was derived by extrapolating consensus expectations of growth and operating margin until 2025. The interesting part of this analysis is to find out which parameter gives rise to the biggest change in market value. In this case it was not revenue growth unless it went down a lot, which would only happen under a recession scenario. An upside change to operating margin expectations drives a rather large change in value; in other words, growth companies that can raise operating margin faster than expected will get rewarded. But the most sensitive parameter to the market value was the interest rate. By moving up the 10-year interest rate by 100 basis point the company’s value fell 26% because the higher interest rate impact financing costs on debt and the cost of equity. The example above provide a glimpse into the important battleground in equities in 2022. Higher interest rates because of higher inflation combined with the fiscal drag will create an environment with higher discount rate on cash flows while likely lower overall growth. This will penalize a lot of growth and bubble stocks, these companies can only mitigate this impact by raising operating margin beyond current expectations. If they do not manage to do that, then we could see great losses in 2022 in these pockets of the equity market.

Equities 2021-12-10 00:00 4 minutes to read Summary:  Markets are facing speed bumps again as investors await key inflationary numbers and the Feds meeting outcome, key catalyst that will ultimately change market dynamics, with fiscal stimulus being taking away. The US benchmark the top 500 stocks fell from record high territory, falling for the first time in 4 days, while the ASX200 fell for the second day, dipping below its 50 day moving average. Growth names are being sold down and safe haven assets, bonds, the USD, the JPY, are gaining appeal. It is for three important reasons. Here is what you need to know and consider, plus the five elements to watch today. Firstly, investors are holding their breath ahead of key events: Friday’s US inflation data (tipped to show inflation rose 6.8% YOY in November), plus we are also seeing investors pre-empt that the Federal Reserve next week, will map out tapering and interest rate hikes for 2022. A poll by Reuters showed that 30 of the 36 economists expect the Fed to hike rates sooner than thought, rising rates four times from the third quarter of the year 2022 to the second quarter of 2023 (expecting rates to be 1.25-1.50%). This explains why investors took profits from nine of the major 11 US sectors overnight. So growth stocks and sectors that thrive in low interest rates; consumer discretionary, real estate and information technology, saw the most selling as a result. From a stock perspective Tesla fell 6%, Semiconductor giant Advanced Micro Devices, and Etsy-the e-commerce vintage store, both fell 5%, and chip maker Nvidia fell 4%. If you look at Saxo Markets themes that we track, you can also see the most money on a month-on-month basis, has come out of semiconductors, while the other themes we track are posting monthly gains. Secondly, it’s critical to be aware, the UK Prime Minister announced restrictions to curb Omicron’s spread -  so the UK entered new work-from-home guidance, that could cost the UK economy $2.6 billion a month (according to Bloomberg). Meanwhile, a study by a Japanese scientist found the new variant to be 4.2 times more transmissible in its early stage than delta. As such some companies are responding like Lyft saying their workforce can work remotely in 2022, while Jefferies asked staffers to WFH. This means, travel and tourism stocks could see short term pressure, Australian and US stocks that are exposed to the UK could also see pressure, while oil could see demand weakness here. Plus, it could be time to again rethink exposure to the office property sector, as it’s a likely to remain squeezed, while industrial and logistics real estate remain supported given the likely new shift to WFH. Thirdly – be aware of volatility. A measure of this, VIX CBOE Volatility Index rose for the first time in four days, rising back above the 50 day average. Volatility has fallen from its 12-month high and remains contained right now as Pfizer said its vaccine can neutralize the new COVID strain Omicron after three doses (two doses offer protection again severe disease). However, keep your ears to the ground. If tomorrow’s inflation data from the US is worse than expected, expect volatility to spike, and growth stocks to see further selling and expect safe haven assets (USD, bonds, USDJPY) to gain more attraction. Aside from the above – here’s 5 things to watch today; Firstly - let's go over Fortescue Metals (FMG) 1.FMG’s CEO, Elizabeth Gains just announced she is standing down, right in the thick of iron ore having a murky outlook. It’s not been an easy 12 month for FMG holders. FMG trades 7% lower this year, but it’s a far cry from its all-time high, down 30% from its peak as iron ore price remains in a bear market (down 40% from May). 2. FMG’s trading range has been restricted for two weeks as the world holds its breath to learn more about China’s property sector. FMG shares have broken out above their 50 day moving average but its trading has been even more so restricted over the last three days as its stock hit a key resistance level awaiting news from China. If good news comes, FMG could break out higher. But it looks murky. Majority of FMG revenue (94%) comes from iron ore, and its majority sold to China (90%) (unlike BHP that now diversifies its sales to other countries). And now… we are getting mixed signals from China, making iron ore’s outlook look hazy. 3. On the positive side; week-on-week Australian iron ore exports are up. China has increased its monthly imports of Australian iron ore in November, more than expected. This has supported the iron ore price rising 8.9% this week. 3. But on the negative side - Evergrande, one of China’s biggest property developers was just officially downgraded -labelled a defaulter by Fitch Ratings after failing to meet two coupon payments after a grace period expired Monday. This may now trigger cross defaults on Evergrande’s $19.2 billion of dollar debt. Also at the same time JP Morgan downgraded its outlook for iron ore expecting the iron ore to fall 7% to $92, while Citi expects seaborne iron ore prices to fall 60-$80/t in 2022 on Chinese policy changes. 4. However, Fortescue has been in the news this week, for its shift to a green future. Was this a tactic? A smoke Bomb? Yesterday FMG announced its Future Industries department signed a pact with the Indonesia to explore hydrogen projects. The day before Fortescue Future Industries (FFI) and AGL Energy (AGL) teamed up to explore repurposing NSW coal-fired power plants and turning them into green hydrogen production facilities – to hopefully create renewable electricity production, 250 megawatts (which will generate 30,000 tonnes of green hydrogen per year). AGL and FMG will undertake a feasibility study to repurpose AGL’s Liddell and Bayswater power stations, that both accounted for 40% of NSW’s carbon dioxide emissions. Sheesh. Secondly  – Australian analyst rating changes to consider ANZ AU: Reiterated as a Bell Potter BUY, PT $30.00, RRL AU: Regis Resources Raised to Outperform at RBC; PT A$2.50 EBO NZ: EBOS Raised to Outperform at Credit Suisse; PT NZ$43.14 FMG AU: JPMorgan downgrades FMG from Overweight to Neutral, dropping its PT from $22 to $20. RIO AU: JPMorgan downgrades RIO from Overweight to Neutral, dropping its PT from 113.00 to 102. MIN AU:  Reiterated as JPMorgan hold/neutral, dropping its PT from $47 to $40 Thirdly  - what else to watch today Annual General Meetings: HMC AU, PDL AU, PH2 AU, SOL AU Other Shareholder Events: AOF AU, HMC AU THL NZ: Tourism Holdings Halted in NZ Pending Proposed Transaction ADPZ NA: APG Buys 16.8% Stake in Ausgrid from AustralianSuper EBO NZ: Ebos Successfully Raises A$642m From Share Placement Fourthly - Economic news out 8:30am: (NZ) Nov. Business NZ Manufacturing PMI, prior 54.3 8:45am: (NZ) Nov. Card Spending Total MoM, prior 9.5% 8:45am: (NZ) Nov. Card Spending Retail MoM, prior 10.1% Fifthly - Other news to keep in mind: Australia Seen Facing Steeper Borrowing Costs If Slow on Climate RBA Likely to Stick With QE Until Election Over, BofA Says      ---   Markets - the numbersUS Major indices fell: S&P 500 -0.7% Nasdaq -1.7% Europe indices closed lower: Euro Stoxx 50 lost 0.6%,London’s FTSE 100 lost 0.2% flat, Germany’s DAX fell 0.3%Asian markets closed mixed: Japan’s Nikkei fell 0.5%, Hong Kong’s Hang Seng rose 1.1%, China’s CSI 300 rose 1.7%. Yesterday Australia’s ASX200 fell 0.3% Futures: ASX200 hints of a 0.14% fall today Commodities: Iron ore rose 1.3% to $110.50. Gold fell 0.4%, WTI crude fell 2% to  $70.94 per barrel. Copper fell 1.4% Currencies: Aussie dollar trades 0.4% lower at 0.7146 US. Kiwi down 0.3% to 0.6788 per US$ Bonds: U.S. 10-year yield fell 3.5bps to 1.4871%,Australia 3-year bond yield fell 0.8bps to 0.95%, Australia 10-year bond yield rose 6bps to 1.68%

Macro 2021-12-14 08:35 6 minutes to read Summary:  Risk sentiment soured yesterday, with some attributing the market nervousness to uncertainty on how hawkish a pivot the Fed is set to make at the FOMC tomorrow, although Fed rate expectations for next year as expressed in the most liquid futures have eased from recent highs. That meeting is the most significant major macro event risk for the 2021 calendar year, although important ECB and BoE meetings are set for Thursday. What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - yesterday was a very disappointing session for US technology stocks with Nasdaq 100 futures looking to push higher early during the session but ended on the lowest close in four trading sessions. Nasdaq 100 futures are trading around the 16,110 level this morning with the 50-day average around the 15,810 level as the key support level to watch on the downside should risk-off continue. EURUSD – the EURUSD supermajor continues to coil in a tight range ahead of the FOMC meeting tomorrow and ECB meeting on Thursday, both of which are set to bring refreshed forecasts for the economy and policy. The FOMC meeting is likely to carry more weight in terms of the market reaction, especially if the Fed waxes more hawkish than expected (more below) and takes Fed rate expectations for next year to new highs for the cycle. The lines in the sand on the chart include the 1.1186 lows of November, while the recent pivot highs of 1.1355 and 1.1384 bar the upside, with 1.1500 a more structural resistance/pivot zone. AUDUSD – watching the US dollar closely over the next couple of sessions, particularly in the wake of tomorrow’s FOMC meeting and what it brings in the way of a crystallization of the Fed’s hawkish shift (more below) and in the market reaction. If the meeting brings a spike in market volatility, traditionally risk-correlated currencies like the Aussie could show high beta to swings in the US dollar in either direction (I.e., if the Fed waxes more hawkish than expected and this triggers risk-off and a stronger USD). AUDUSD recently broke down through the prior 2021 lows near 0.7100 and tested the huge 0.7000 level before staging a sharp bounce. That 0.7000 level could serve as a kind of “bull-bear” line from here. Crude oil (OILUKFEB22 & OILUSJAN22) has settled into a relatively narrow range with Brent finding resistance at $76, the 21-day moving average while support remains the 200-day moving average at $73.15. OPEC in its monthly oil market report maintained their 4.2 million barrels per day demand growth outlook for 2022 with current omicron-related weakness being offset by a strong recovery during Q1. The Saudi energy minister said the energy transition will cause an oil-price spike later this decade while also warning traders against shorting the market at a time where large speculators have reduced their Brent crude oil long to a 13-month low. On tap today we have IEA’s Monthly Oil Market Report. Gold (XAUUSD) remains stuck just below its 200-day moving average at $1794 with focus on what 20 central bank meetings this week will deliver in terms of inflation fighting measures at a time where the omicron variant continues to cloud the economic outlook. With US inflation rising at the fastest pace since the 1980’s, Wednesday’s FOMC meeting remains the top event. The market is currently pricing in three rate hikes next year with the first one due around June. The other semi-investment metals of silver (XAGUSD) and platinum (XPTUSD) both struggling with the latter’s 850-dollar discount to gold, near a one year high, potentially deserving some attention. US Treasuries (TLH, TLT). The US yield curve bulled flatten yesterday with 10-year yields falling by 7bps to test support at 1.41%. To contribute to this move was news of the first omicron death in the UK, and the winding done of short US Treasury positions before the end of the year. Price action will remain volatile ahead of the Federal Reserve meeting, where Powell is expected to announce an acceleration of the pace of tapering. The focus is going to be also on the Dot plot, where longer term projections might be moved higher, pushing up the long part of the yield curve. However, long-term yields can move higher only that much, as omicron distortions will continue to keep them compressed. It looks likely that 10-year yields will continue to trade rangebound between 1.40% and 1.70% until the end of the year. European sovereign bonds (IS0L, BTP10). The Bund yield curve bull flattened yesterday led by safe-haven buying amid concerns over omicron. Italian BTPS gained the most as the market pushes back on interest rate hikes in 2022. The focus, however, continues to be on the ECB meeting on Thursday. An announcement of the end of the PEPP program in March 2022 is widely anticipated. What’s not clear is whether it will be announced that bond purchases will be compensated by another scheme, such as the APP. It is likely that the ECB will stall as members are torn between inflation and a new wave of Covid infections. If investors feel the support of the central bank is fading, European yields might resume their rise with the periphery and Italian BTPS leading the way. Yet, the move will be contained as yields will remain compressed by covid concerns. UK Gilts (IGLT, IGLS). The BOE might not deliver on a 10bps interest rate hike this week as members are divided concerning Covid restrictions. Michael Saunders, one of the most hawkish MPC members, said that he will need to think about it twice before voting for a rate hike. As expectations for interest rate hikes in the UK are the most aggressive among developed economies. It is possible that if the central bank does not hike, the Gilt yield curve will be steeping with short-term Gilts gaining the most as the market pushes back on next year’s rate expectations. What is going on? China reports first omicron variant case of covid - bringing fears of supply chain disruptions due to the country’s zero tolerance policy on virus cases that can mean profound shutdowns in response to outbreaks. Chinese property developers under new pressure, with the focus this time on Shimao Group Holdings, whose Hong-Kong listing is down over 75% this year and down over 30% over the last week on concerns that a deal between the company’s business units is a sign of financial stress for the company. The company’s 2030 USD-denominated bonds lost almost 13% overnight as the yield rose above 10%. Other Chinese property developer shares were also under pressure overnight. Tesla shares down 5% as growth stocks are under pressure. Tesla shares pushed below $1,000 yesterday adding further pressure to related assets in the Ark Innovation ETF and Bitcoin is also seen lower this morning. Elon Musk sold $907mn worth of shares yesterday according to a filing overnight in order to pay taxes on another round stock options that were exercised. Toyota finally pushes into EV. Japan’s largest carmaker wants to compete with Tesla and Volkswagen announcing $35bn of investments into battery electric vehicles showing the first sign that Toyota is acknowledging that this is the future of the industry. Toyota has so far pursued hybrids on the ground of being more economical, but this push into BEV with 30 new models validates BEVs once and for all, even though Toyota is still saying that it does not know which technology will win. US Harley-Davidson set to spin-off EV motorcycle unit – the plan to spin off Harley’s EV business via a SPAC saw Harley-Davidson shares spike 19% before surrendering most of the gains. Harley’s LiveWire EV business unit will combine with SPAC AEA-Bridges Impact to form a new publicly traded company. The move is meant to take advantage of the premium the market is willing to pay for pure-play EV companies. EU diplomats suggest time running out on Iran nuclear deal - as Iran is progressing rapidly toward enriching uranium for potential use in nuclear weapons. The diplomats worry that without a breakthrough soon, the original 2015 agreement “will very soon become an empty shell.” What are we watching next? The Wednesday FOMC as the year’s final major macro event risk. The FOMC meeting tomorrow is set to bring a very different monetary policy statement from the prior statement after the Fed’s clear pivot to inflation fighting mode. As well, the meeting will see an update of economic forecasts and interest rate policy forecasts (the “dot plot” in which 19 Fed members forecast where the Fed funds rate will likely be in 2022-24 and in the longer term). Most interesting will be the degree to which Fed members have raised their policy rate forecasts relative to what the market is predicting, which is for just under three rate hikes through the end of next year. Prior forecasts have generally come in lower than market expectations. The baseline expectation for the pace of QE “tapering”, or slowing of purchases, is that the Fed will double the pace of tapering, which would mean the Fed’s balance sheet is set to stop growing by the end of March. Anything that suggests a faster pace of tapering than this doubling (for example, a promise to wind down before March) and that hints that a hike at the March FOMC meeting is possible would be a hawkish surprise. The European Council meets on Thursday, and apart from having to deal with Covid-19 and the Russian threat on its eastern borders, the council is also set to decide whether investments in gas and nuclear energy should be labelled climate friendly. The design of the EU green investment classification system is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition, especially given the need to reduce the usage of coal, the biggest polluter. Earnings Watch – the earnings calendar is getting very thin this week and no major earnings expected today. Wednesday: Inditex, Toro, Lennar, Heico, Trip.com, Nordson Thursday: FedEx, Adobe, Accenture Economic calendar highlights for today (times GMT) 0830 – Sweden Nov. CPI 1000 – Euro Zone Oct. Industrial Production 1100 – US Nov. NFIB Small Business Optimism 1300 – Hungary Central Bank Rate Decision 1330 – US Nov. PPI 1900 – New Zealand RBNZ Governor Orr before parliament committee 2130 – API Weekly Report on US Oil and Fuel Inventories 2330 – Australia Dec. Westpac Consumer Confidence 0200 – China Nov. Retail Sales 0200 – China Nov. Industrial Production During the day: IEA’s Monthly Oil Market Report   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple Spotify Soundcloud Sticher

Apple’s Near a $3 Trillion Market Cap: Is it Right for You?   Apple (AAPL) is one of the best innovative tech companies around. However, its market cap is getting close to the $3 Trillion mark, and people must wonder if this is the right stock to invest in for your future.   Having a slice of the Apple company may do wonders to you. A couple of days ago, Warren Buffett’s stock holdings hit a record of $152 Billion in Apple stock. His investment of $31 billion continues to grow and surpass all his other companies.   Right now, Apple has the largest company by market cap in the world. When Apple’s stock price (AAPL) hits $182.86 per share, the company will have a market cap of $3 trillion. The next largest company would be Microsoft (MSFT), with a market cap of $2.43 billion.   Why Would Investors invest with Apple?   Since November 11th, Apple’s stock price has soared, and investors are trying to get a piece of the pie. This company is no ordinary company. It is a company that runs on innovation and excellence.   During the 4th Quarter, iPhone has increased in revenue 47% year over year to almost $39 Billion. The revenue has increased 29%, up to $83.9 billion. In addition, sales of the services Apple offers like Apple Music, Apple Pay, Apple TV+, and others have increased by over 25%.   For yearly revenue, Apple has reported combined sales of $365.8 billion, which is 33% higher than they took in 2020 at $274.5 Billion with gross margins up to 45%.   Most people think Apple is a company that has the iPhone and Macbook computers. However, this company always creates excellent products for its users that surpass most other companies.   A couple of years ago, Apple created the AirPods. AirPods are a simple Bluetooth earbud that can connect with your device. As of 2020, AirPods brought over $10 billion of revenue. That amount of revenue is more considerable than most tech companies. If you compare this with companies like Twitter (TWTR) or even Netflix (NFLX), you will see AirPods itself can bring in more sales. For instance, Twitter had revenue of $3.74 billion in 2020.   AirPods could be its own stand-alone sound company that brings in more revenue than Bose and JBL combined. That speaks volumes to Apple's products and how each product could be divested as its own company.   Apple is innovating, and you can see this through the new products they are getting ready to launch, such as the Apple Car and an augmented reality/VR set. These innovations give investors confidence that Apple is not just a phone company or computer software. Instead, they create and make more products that will dominate the new sectors.   Is Apple a Risky Investment?   With an almost $3 Trillion market cap and being the largest company in the world, you must wonder if it could all fall apart. That is not something you should worry about. Go to a coffee shop, gym, or mall and look at which devices people use.   Consumers usually use iPhones; they have AirPods in their ears and use MacBooks for business and work. So, it is hard not to see why the company brings in more revenue each year.   In the 4th Quarter of 2021, earnings have gone from $0.73 to $1.24 per share compared to the prior year. This company is working to bring in more revenue while creating value for its customers and shareholders.   If you think Apple is a bit riskier, there are ways to minimize the risk. You could invest in Microsoft (MSFT) as a less risky company. They have a stable subscription style business bringing them up as the second-largest company in the world. It is hard not to put these two companies together.   The other option is to find a nice index fund you can invest in, like VTSAX or VFIAX or another suitable Vanguard Index Fund. They can capture the stock market with less risk associated with owning a more significant portion of a single stock. Often, Apple stock is the number one investment for these index funds since they invest based on market capitalization. In this way, an investor can own Apple as part of a more diversified portfolio.   Is Apple Right for You?   Looking at the finances, you must wonder, is Apple right for me? The company continues to innovate and grow. Apple’s market cap is nearing $3 Trillion, and no one could have thought this was possible even a few years ago. Apple stock is not just a 10 bagger meaning that it is increased ten times but a rare 100 bagger twice over. If an investor had bought Apple stock in 2001 and reinvested the dividends, $10,000 would have turned into over $3.6 million.   In 2018, Apple hit a $1 Trillion market cap. It took two more years to double it. So far this year, the stock price has risen over 30% on top of the 80% the stock price rose in 2020. Now compare that to the S&P500, which has only increased 25%. In 2021.   Apple is a company to invest in at the right price. The company is innovative, has a solid balance sheet, and grows the top and bottom lines. Apple continues to grow behind a brand that means excellence and perfection. People may not always enjoy the price of the products, but you cannot deny they are built with quality and are in high demand.   Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.7% out of over 8,182 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.   Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.   

An active reassessment of the outlook for monetary policy continues in the financial markets, but these changes have so far not moved gold from its position near $1800. The latest gold performance shows that it remains a portfolio diversification instrument, with little correlation to stock indices. Gold has gained for the third consecutive day, almost hitting the $1810 level. Last week the price came under pressure along with stocks, as US government bond yields rose as investors preferred them over precious metals paying no dividends or coupons. Gold also decreased intraday on Monday on a sharp fall in equities. However, buying on declines towards $1785 is well notable in gold. This is another jump around sustained buying. Previously, the areas of notable buying were $1760 in November and December and $1720 in August and September. Even earlier, in March 2021, gold got strong demand on dips to $1680. It is important to note that the higher support levels in gold at the end of last year occurred at the same time as the bond yields were rising, so the correlation between these assets is not direct. Historically, gold is vulnerable to rising long-term government bond yields only in case of a massive risk-off in the markets, which we witnessed in the epicentre of the last two global crises in 2008 right after the Lehman bankruptcy and in 2020 in the first weeks of the official pandemic. If the Fed and other central bankers manage to rein in inflation without causing major market turbulence during the policy normalization period, it could be a good springboard for gold. We have seen a similar example in the last tightening cycle. The first rate hike at the end of 2015 ended a corrective pullback in gold, becoming the starting point for a new six-month-long growth wave. Now the approach of a rate hike could draw attention to gold as a hedge against declines in growth stocks, which have a high sensitivity to interest rate movements. On the technical analysis side, if a new upside momentum in gold forms, it will lead the path to the $2500-2600 area after a 61.8% Fibonacci retracement from the August 2018 to August 2020 growth wave.

On Monday, we saw colourful confirmation of how much stock market dynamics are affecting Ether and Bitcoin. Following the intraday fall of more than 2% in the Nasdaq, the top two cryptocurrencies surrendered their psychologically important levels, retreating at $ 3K and $ 40K, respectively. However, in all cases, the fall was redeemed. The Nasdaq closed with a nominal decline, and Bitcoin very quickly returned to levels near $ 42K. Ether is currently trading at 3100, gaining over 1% since the start of the day. The broader technical picture has not changed, indicating locally oversold, which puts buyers on the run who have been waiting for a discount in recent days. The crypto market as a whole has been losing 0.6% over the past 24 hours, but since the beginning of the day, it has been adding 1.6% to $ 1.96 trillion against the dip to $ 1.86 trillion at the peak of the decline on Monday evening. The Cryptocurrency Fear and Greed Index lost 2 points in a day, dropping to 21. This is still in extreme fear, just like yesterday and a week ago. In our opinion, bitcoin and ether are bought locally by enthusiasts and a number of long-term strategic investors, while investment funds trade them based on bursts of demand or risk aversion. By and large, this puts cryptocurrencies on a par with growth stocks, sensitive to the dynamics of interest rates: the rise in profitability causes a sell-off of risks. At the same time, we must not forget that cryptocurrencies are more mobile, that is, they sometimes lose twice or three times more than Nasdaq. If so, then cryptocurrencies are far from the bottom, since the process of normalizing interest rates in financial markets is far from complete.

As stocks have trended higher, especially the tech stocks, soared in 2021, we must be reminded that Microsoft is once again one of the top companies in the world by market cap. Apple is number one in the world by market cap, and Microsoft continues to be right behind them. In October of 2021, Microsoft had bypassed Apple as the largest company by market cap globally, but Apple soon passed them once again. Microsoft is not the same old company we had known back when Bill Gates was in charge. They have changed and have created a more diverse brand and product portfolio leading that change. Bill Gates stepped down as CEO in 2000 and officially left his full-time role in Microsoft in 2008. Since then, Microsoft has diversified its portfolio to include many more products, including gaming, cloud services, and making Office more business-friendly. Microsoft under Gates was known for two big things: Microsoft Office and Windows; that was the entire portfolio. Satya Nadella, the current CEO of Microsoft, has revolutionized the software company and has made it a software company with a vision of working with businesses, making gaming a priority, and expanding Azure, its cloud network. How Does Microsoft Make Money? A diverse portfolio of many more products allowed Microsoft to branch out from only MS Office and Windows software and adapt to software technology's future. Microsoft has adapted to the world of sales in its subscription-based software model. They sell their Microsoft Office products to businesses and consumers, creating a pay-as-you-go subscription-based business model. Productivity and Business In 2020, Microsoft Office made a significant amount of their revenue from subscription-based software compared to 0% in 2000. MS Office at one point brought close to half of the revenue in 2000, but Office is not even 25% of the revenue that Microsoft takes in now, having over $35 billion in revenue each year. The new software has been revolutionizing businesses. First, they pay for Microsoft Office, and with that, they get Microsoft OneDrive, Teams, and Dynamics. Teams is just a fancy business video chat software like Zoom Video Communications (ZM), but you can only have Teams with Microsoft business accounts. Dynamics is another software that helps with business computing. It helps with business efficiency and works with customer relationship management or CRM, but it is not one of the top competitors to Salesforce (CRM). However, it has over $3 billion in revenue. Windows continues to be one of the most widely used software globally. That domination is starting to penetrate other parts of their customers giving them opportunities to dominate other businesses. With the subscription-based model, they will continue to bring in significant revenue, earnings, and cash flow. Before the proposed acquisition of Activision Blizzard (ATVI), LinkedIn was Microsoft's largest acquisition. It came in at $26 billion in 2016. Today, LinkedIn makes over $8 billion annually in revenue, up from the $3 billion pre-acquisition. LinkedIn has no major competitors and creates most of its money from job offer advertisements, other advertisements, and cash for LinkedIn premium. The Cloud Cloud software has become a bigger space for companies. It has led Microsoft to enter the space and business opportunities through the Azure Cloud system. Microsoft has thus gained a foothold in the cloud space. Azure Cloud system by Microsoft came out in 2009, and in 2021 the platform had become the second-largest cloud-based service in the world behind Amazon Web Services (AWS). With the cloud service, Microsoft's revenue grew by 48% in quarter 3 of 2021. It has reached a 21% market share and continues to gain more traction in the cloud space.   Azure consists of public, private, and hybrid cloud service products that help to power modern businesses. Dynamics and Azure are contributing to over 31% of Microsoft's revenue. In addition, customers are reaping many benefits through the cloud as it enhances the user experience with Microsoft products. The Gaming Industry Microsoft is becoming one of the leaders in the gaming industry. The Xbox is leading the charge with gaming, and Microsoft just made a deal to acquire Activision Blizzard for $69 Billion; if government regulators approve the sale, this acquisition will occur in 2023. The purchase would make Microsoft one of the largest gaming companies in the world. They would then own games like Call of Duty, War of Warcraft, and Candy Crush. In addition, making the deal would put them behind Sony and China's Tencent as a top-three gaming company globally. Microsoft is putting their company in a position to take on the Metaverse. Apple (APPL), Google (GOOG), Meta (FB), and Microsoft are creating technologies for the Metaverse. Satya Nadalla has emphasized that gaming technologies are part of the Metaverse. Is Microsoft a Good Stock to Buy? If we look at the price-to-earnings (P/E) ratio, we end up with an overvalued stock compared to Apple and Google. The P/E ratio is 32.0X, making it a bit more overvalued than Apple, which is trading at a valuation of 28.5X, as of this writing. They are close in the P/E ratio, but you would like to see the P/E ratio lower as an investor. Microsoft is a dividend growth stock that has raised the dividend for 19 consecutive years. The most recent quarterly dividend increase was $0.62 per share from $0.56 per share. The forward annual payout is now $2.48 per share with a conservative payout ratio of about 27%. The question is whether the hype of Microsoft is worth a buy as this company continues to create a diverse portfolio moving from one business to another. You can see the company dominating competitive markets like gaming and cloud systems. It has also innovated different types of software to help other businesses. Microsoft's future looks excellent if you are an investor, but the stock is likely overvalued based on the P/E ratio. In addition, the dividend yield is low at 0.84%. This value is less than the average dividend yield of the S&P 500 Index. Suppose individual stocks are too risky for you. In that case, an alternative is to try an excellent ETF or even a tech ETF to gain exposure to Microsoft and other overvalued tech companies. In many cases, ETFs are market cap-weighted, and Microsoft is one of the top holdings. You can always own a piece of Microsoft, Apple, Google, and Meta through an excellent ETF like an S&P 500 ETF. Microsoft is also a top 10 holding in some of the best dividend growth ETFs. These index funds will help you own a selection of some of the most profitable and most prominent companies in the US. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, Entrepreneur, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.5% (126 out of over 8,212) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 

Recently, Google (GOOGL) announced that it would conduct a stock split. Inspired by an excellent 4th quarter earnings report and a high share price, Google has decided to split the stock to help more new investors acquire shares. The split would be a 20-for-1 stock split. How Has Google Grown Over the Years? In 2015, Google rebranded itself into the Tech giant Alphabet. Larry Page sought to make Google something more than a search engine. The company had ambitions of working on healthcare, hardware, and drones, which was a bit different from having a search engine-focused business. It would help create something more than the internet. So, Google changed its name and vision to the holding company Alphabet, allowing them to create, experiment, and invest in new opportunities. People continue to see the growth in a stock like Alphabet. After the 4th quarter, Alphabet announced their earnings, which grew over 32%. This revenue growth sent the stock soaring another 7.5% in after-hours trading. Due to the continued growth of Alphabet, their stock has become too pricey for everyday retail investors. A split can solve the problem. For instance, both Apple (AAPL) and Telsa (TSLA) split their stock allowing more investors to buy at lower prices. In addition, splitting their stock to lower the cost enables new investors to jump on board and become owners of the company. Alphabet has three classes of stock, class A, B, and C. Class A gives each shareholder one vote. Class B is for some of the founders and early investors into the company, and they have ten votes per share. Lastly, Class C has no votes. Each of these classes will conduct a stock split. One of the great things about Alphabet is that it continues to grow. Since May of 2020, Alphabet's value has doubled. Earlier this year, Alphabet posted a 62% revenue growth for the 2nd quarter. Right now, the company is worth just shy of $2 trillion, making it one of the world's largest companies by market cap. So naturally, investors want to be a part of a growing company. A stock split allows more people to be invested for the long term with Alphabet. What Exactly is a Stock Split? A stock split is when a company splits a stock dividing it up and giving the shareholder additional shares. For instance, if a share of stock was worth $1,000, a company could do a 10-for-1 split. This split would give each shareholder ten shares for every share they currently own. Each share would now be worth $100 apiece. However, the total market capitalization does not change before or after the split. Companies may split the stock when the share price rises too quickly, making it unattainable for new customers to hold that share. The price gets too high. Why is Alphabet Splitting Its Stock? Alphabet is the most expensive stock on a per share basis in Silicon Valley, and there are other opportunities to explore as an investor. Alphabet's stock is nearly $3,000 per share. At this stock price, many new investors cannot own a part of Alphabet unless they go the route of fractional shares or do index investing. Other authors have speculated that Alphabet is seeking to join the Dow Jones Industrial Average. The Dow Jones is a price-weighted index, and with the high price of Alphabet stock, the Index would not want to bring them on board. In August of 2020, Apple did a 4-for-1 split of their stock, and it lowered their weight by about 3% in the Dow 30. Companies like Alphabet and Amazon are too large to be added into the Dow. Their stock prices would have an uneven weight due to the high cost. If those companies split their stock to lower prices, it gives them more advantages, and they can join the Dow 30. As Alphabet wants to continue to grow, it will want to add new investors and reach broader audiences. By potentially joining the Dow 30, Alphabet can make this happen by going through the various index funds and mutual funds that track the Dow Jones. Will the Split Affect the Value of the Stock? What happens when a split is announced? The total value of the shares will not drop. Instead, the new stock price will fall by 1/20th of the old stock price. Typically, shares increase in aftermarket trading like we saw the day after Alphabet announced the split. The total value will not be reduced in any way after the stock split. Each Class A and Class B shareholder will now have more votes but in the same proportion as before the split, and the Class C shares will continue to be the cheapest avenue to owning a piece of Google. When Will This Stock Split Take Place? Alphabet has announced that everyone that owns sarees on July 1st will receive their new shares on Friday, July 15th. That price should be around $150 per share, which is 1/20th of the cost of $3,000. The trading at the new stock price will take place on July 18th. What Does This Mean for the Regular Investor? Typically, a stock split is neither good nor bad. The stock will usually rise with the new interest from investors, and eventually, the buzz will fade away. However, if this is a worry for you as an individual shareowner, then maybe owning an index fund or ETF is the way to go for you to improve diversification. As Alphabet grows, it will continue to grow its revenue streams and bring more value to the shareholder. Growth is an excellent thing for an investor. We see many companies declining, like GE (GE) or even AT&T (T). For instance, AT&T (T) cut its dividend due to continued weakness and a change in strategy. As companies like Apple, Microsoft, and Alphabet continue to innovate and create, investors will want to be a part of the journey as shareholders. Should you worry about Google's stock split? Again, there is nothing to worry about; just keep to your investing strategy and keep investing. Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, Entrepreneur, FXMag, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.5% (126 out of over 8,212) of financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money. 

Tesla bounces strongly on Tuesday as risk assets surge. TSLA stock gains just over 5% on Tuesday. Geopolitical tensions falling help risk appetites return. Tesla (TSLA) shares bounced strongly on Tuesday, eventually closing up over 5% in a strong day for equities. The stock market was buoyed by news of some Russian deployments returning to their bases. Russia then appeared to confirm this as hopes grew for a diplomatic solution. This saw an obvious bounce in equities (https://www.fxstreet.com/markets/equities) with the strongest names being those that were previously the weakest. Understandable, but is this gain sustainable? NATO this morning has said it sees no sign of Russian troops pulling back from the Ukraine border. NATO has said it sees Russian troop numbers still growing along the Russian-Ukraine border. This news (https://www.fxstreet.com/news) still has legs. Volatility has been high as a result and will likely continue that way. Tesla Stock News The latest quarterly SEC filings have provided much information to pore over. In particular, Tesla, they do note some hedge fund selling. This is not too surprising given the record highs TSLA stock pushed on to before Elon Musk sold a stake. Benzinga reports that the latest filing shows Ray D'Alio's Bridgewater cutting its stake in Tesla. Cathie Wood of ARK Invest was regularly top-slicing her firm's stake in Tesla recently. CNBC also reported yesterday that hedge fund Greenlight Capital had made a bearish bet on Tesla shares. Greenlight, according to the report, has been a long time Tesla bear. Apart from those snippets though, macroeconomic factors are the main driver of the Tesla stock price currently. Electric vehicle stocks have not been a strong sector so far in 2022 as growth, in general, is out of favor with investors. This has led to steep falls in other names such as Rivian (RIVN) and Lucid (LCID). Both are at a much earlier stage of development than Tesla (TSLA) and on that basis, we would favor Tesla (TSLA) over them. But we must stress we would ideally avoid the sector entirely until perhaps the second quarter. Once markets have adjusted to the prospect of higher rates, some high-growth stocks may benefit. historical in a Fed (https://www.fxstreet.com/macroeconomics/central-banks/fed) hiking cycle the main indices do advance but growth sectors struggle. Rivian so far is down 36% year to date, Lucid is down 24% while Tesla is the outperformer, down 12% for 2022. Tesla Stock Forecast We remain in the chop zone between the two key levels of $945 and $886. Breaking $945 should lead to a move toward $1,063. That would still be consistent with the longer-term bearish trend. Nothing goes down or up in a straight line. TSLA is unlikely to be able to fight the current overpowering macroeconomic backdrop of rising rates (https://www.fxstreet.com/rates-charts/rates) hitting high growth stocks. But breaking $945 is still significant in the short term and should see some fresh momentum. While $886 is significant, the 200-day moving average at $826 should have our real attention on the downside. Tesla has not closed below this level in over 6 months, so that would be significant and again lead to a fresh influx of momentum. Just this time though, it would be selling momentum. Tesla (TSLA) chart, daily Short-term swing traders should note the volume momentum behind moves. Once volume dries up, Tesla tends to fall off intraday. From the 15-minute chart below, we have an opening gap from Tuesday down to $880. This is short-term support, but a break will see the bottom of Monday's range at $840 tested. Tesla (TSLA) 15-minute chart

GGPI Stock has rallied after a Superbowl ad. GGPI stock surges another 4% on Wednesday as momentum remains high. GGPI may struggle as markets turn negative and growth stocks struggle to hold gains. Gores Guggenheim (GGPI) stock is probably more commonly referred to as Polestar stock now that the SPAC will take electric vehicle maker Polestar public this year. The deal is due to complete some time in the first half of 2022. Polestar is an electric vehicle maker backed by Volvo and Chinese company Geely. So what is different about this one compared to the others? Gores Guggenheim Stock News Polestar looks merely like Volvo's EV division. We know this is not the case as Volvo has its hybrid and EV models planned. However, the companies certainly have strong links. Rivian (RIVN) went public in a blaze of hype and publicity due largely to its links to Amazon (AMZN) and Ford (F). Both companies had stakes in Rivian. However, from what we know, Rivian will have to build out its manufacturing and distribution network. It will not piggyback on Ford for this. Polestar uses the Volvo service network in the UK, and Polestar will utilize Volvo's South Carolina plant to manufacture Polestar models in the US. Previously, Polestar said it will have its showrooms in the US but use Volvo for servicing. Polestar will look to do as much sales work as possible online and use Volvo then for manufacturing and servicing. This gives it an obvious advantage over LCID and RIVN. Gores Guggenheim Stock Forecast On Wednesday, the stock spiked again, closing nearly 5% higher at $12.02. The company has been in charge since the Superbowl ad brought more attention to the stock and the cars. Both seem well received. Now GGPI stock has ramped up to a strong resistance area. Above $12 and as high as $12.36 is the previous spike high from December. This will be tough to break given that high risk stocks are likely to suffer as we close out the week. Geopolitical events are dominating and high growth names are still not favored. SPACs generally hold $10 cash until the deal goes through, so this is obvious support. The best strategy with SPAC trading is to try and buy as close to $10 as possible. GGPI 1-day chart

Rivian stock surged over 6% on Monday as EV stocks looked to Lucid as savior. Nasdaq: RIVN will collapse on Tuesday as reality sets in. Rivian shares still look way too high in our view. Time for a continued dose of reality for EV investors as the market continues to gyrate nervously on geopolitical events. This is not the time to be dabbling in high-growth names with little to no profits. The geopolitical backdrop is challenging with various headlines emanating from the Russia-Ukraine crisis daily. However, no clear path out of conflict currently appears evident. All this has ramped up the negative macroeconomic backdrop for equities. We entered 2022 knowing that central banks were going to struggle with inflation, and data in January confirmed this. We assumed robust economic growth in the major economies would allow the main central banks to raise rates without causing a recession. Bets on rate rises soared and global yields moved up sharply in the first two months of 2022. This hit growth stocks hard in early 2022. Now though the Russia-Ukraine situation has given inflation a further boost but raised the possibility of a recession in Europe and also the US. The huge bull run in equities seen since the 1990s has been helped to a large extent by the huge boost from globalization. This resulted in lower costs and huge new markets from many companies. Global trade increased markedly. Already we have seen efforts to reduce globalization from Trump tariffs to Brexit and now to worldwide sanctions. This is making equity investing more difficult and more specific. All this means growth stocks, the darling sector of 2021, are likely to suffer as 2022 progresses. Rivian as we know is a poster child of high growth stocks. It IPO'd in November in a blaze of publicity and quickly become one of the largest automakers in the world by market cap despite not having much of any production. Rivian Stock News Rivian (RIVN) stock reports its earnings next week on March 10 but peer Lucid (LCID) released its earnings after the close on Monday. These earnings were frankly terrible, missing on EPS and revenue while also slashing 2022 production numbers only two months into the year. As result, Lucid stocks have fallen sharply and are likely to fall more as the week progresses. Rivian and other EV names will get dragged lower as a result. For some reason, optimism was abounding yesterday as EV stocks rallied. Lucid closed up nearly 10% so the risk-reward was always skewed to the downside. We could see a fall of 20% today for Lucid if momentum picks up. Rivian will not be able to avoid contagion effects and will also likely suffer heavy losses on Tuesday. Rivian Stock Forecast Keep an eye on the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) here. Both are in an uptrend but will likely correct today. This could be the signal for more losses. The rally in the RSI failed to even get above 50, showing how weak Rivian stock's momentum is. Only if Rivian breaks $71 do we see any chance, but the risk-reward is firm to the downside. Any positive news regarding Russia and Ukraine would see a violent reaction, but this is likely to be short-lived. The macro environment is getting even more challenging as mentioned. Rivian stock chart, daily

Apple stock remains above its 200-day moving average as geopolitical turmoil remains. AAPL stock is unlikely to break higher until the Russia-Ukraine conflict ends. Apple is likely to fall further as no catalyst in sight and sanctions hurt all global businesses. Apple (AAPL) stock remains in recovery mode along with most US indices as last week's shock and awe sell-off remain the low mark for now. Stocks have entered a changed landscape for 2022, and the situation is worsening from both a macroeconomic and geopolitical viewpoint. Investors were just about coming to accept the inflation and interest rate environment for 2022 and had adjusted portfolios accordingly. High-risk growth stocks were avoided, and the focus returned to those stocks with strong balance sheets and low valuations. Value versus growth had already seen strong outperformance for value. Now things are worse. Sanctions will hit global growth and Europe especially hard. Energy costs are out of control, European gas prices are nearly ten times higher than a year ago. Oil prices we know all about. What we are left with then is higher inflation and now for longer likely reaching into 2024. Interest rates will have to rise, despite slowing growth, leading to stagflation. High-risk assets will struggle. Equities are viewed as a high-risk asset so expect bond inflows to outweigh equity fund inflows for the remainder of this crisis and beyond. Likely sector winners in the short term are defense stocks and oil stocks should have earnings well underpinned now for the remainder of the year. Apple (AAPL) stock is a harder one to quantify in this new environment. The stock certainly has defensive qualities, it has piles of cash which it can use for dividends, buybacks, or acquisitions. It has some pricing power that it can pass on to customers. However, rising commodity prices lead to higher semiconductor prices. Higher energy costs lead to higher shipping costs for inputs and outputs. Rising inflation and possible slowing growth will lead customers to scale back on purchases of luxury goods. Sanctions will hit globalized businesses. Apple Stock News With perfect timing, the EU has just come out and said EU countries must turn off the stimulus tap sharply and take a neutral fiscal stance. This means less free money and a focus on debt reduction, as well as echoes of the dreaded tight monetary policy that prevailed after the Great Financial Crash. This will mean less consumer spending. Apple Stock Forecast We cannot avoid the overall bearish macro and geopolitical background. We would rate Apple as outperforming, but that is an outperform in a bearish market. We note the potential and hope for a swift end to the conflict as Russia and Ukraine meet again for talks. This will lead to a sharp relief rally, so short-term traders take note. The risk-reward is probably skewed to the upside. Wednesday is likely to see a slow gradual move lower or a swift rally on positive developments. Longer-term though the situation is clouded. Unless the conflict ends soon and sanctions are lifted quickly, we fail to see how equities can return to any form of bullishness. The situation from one month ago has not changed apart from lower economic growth. For now, Apple has found support at the 200-day moving average, which is set at $152 today. This is massive support. Break that and it is likely onto $138. The Relative Strength Index (RSI) and Moving Average Convergence Divergernce (MACD) remain bearish, confirming the price move. Apple stock chart, daily

GameStop stock is back on the top trending list but still struggling. GME stock is down 43% year to date. GameStop releases earnings on Thursday after the close. GameStop (GME) is back on the top trending lists, though it has not been seen for a while. Some other stocks have taken the limelight, recently some micro-cap oil stocks, but these have gone back to sleep now as the crowd moves on. GameStop was the original though, and it releases earnings after the close on Thursday. This is generating some attention on the usual social media sites and helping the GME stock price too. At the time of writing, GME stock is up 1.4% at $79.05. GameStop Stock News GameStop earnings are out after the close with a conference call afterward. GME is expected to report earnings per share (EPS) of $0.84 and revenue of $2.22 billion. This would be a marked improvement on Q3 earnings, which it reported on December 8. Back then EPS was forecast at $-0.52 but came in way behind at $-1.39. Revenue came in ahead of forecasts back then too. GME lost 10% the day after its Q3 earnings. We remain bearish on GME stock though and cannot argue against the current trend. The stock has lost 65% over the last nine months and has been on a one-way spiral. The current environment is punishing high growth stocks, and the recent spike in yields will only add to that. It needs blockbuster earnings on Thursday from GME to change that sentiment. GME still trades on a very high multiple compared to other consumer stocks, and rising inflation will hurt. GameStop is also a high street store. It pays wages, electricity, etc., all of which are rising and will continue to do so. GameStop Stock Forecast GME stock closed below our key support at $86 on Monday. This will likely lead to more selling pressure. That will bring GME quickly down to $70, and we may then see a stabilization period as volume is quite strong around the $70 level. GameStop (GME) stock chart, daily    

AMC stock gains on Tuesday as equities and growth stocks rally. More gains are likely on Wednesday for AMC shares as peace hopes rise for Ukraine. AMC Entertainment also saw increased attention from its investment in Hycroft Mining. AMC shares are up 8% to $15.65 as better prospects for peace in Ukraine seem to be lifting up the entire market. The Nasdaq has risen an optimistic 2.7% about one hour into Wednesday's session. Further positivity is in motion with the start of the Federal Reserve's Federal Open Market Committee two-day meeting that is expected to usher in a 25 basis point rise in the fed funds rate. The rise in interest rates should slow this year's hike in inflation. This price action is certainly exciting for AMC apes, who have witnessed AMC stock drop to the low $13s earlier this week. AMC Entertainment did benefit in Tuesday's afternoon session from its acquisition of Hycroft Mining, but it seems the stock is gaining more interest on Wednesday for this buy. Now its acquisition target, HYMC, has seen its shares go in the opposite direction on Wednesday. HYMC stock is trading down 9% at $1.37 at the time of writing. AMC stock closed higher on Tuesday as investors took comfort from the continued collapse in oil prices and hoped for some form of peace in Ukraine. It was oil that was the big driver for equity markets, and growth stock, in particular, bounced hard as this sector had seen the bigger losses since the year began. It is hard to see guess whether this movie can be sustained long term though as yields have once again moved up. This should stall growth stocks. A peace deal would see further gains for all sectors, but then these may be capped if yields keep rising. The Fed decision later on Wednesday will give us more clarity on this. AMC Stock News The big news yesterday though for AMC apes was the investment in Hycroft Mining by AMC. This was right out of left field and remains a puzzling one to say the least. Hycroft Mining is a gold and silver miner with one mine in Nevada. The company has not turned a profit since 2013 and last November said it may need to raise capital to meet future financial obligations. The company also laid off over half of its workforce at the mine last November. This is a pretty high-risk investment and perhaps AMC and AMC apes are used to that. It was only a small outlet as CEO adam Aron alluded to. Nevertheless, the Hycroft Mining (HYMC) stock price soared as retail investors piled into the name. By the opening of the regular session on Tuesday, HYMC stock was trading nearly 100% higher, but it closed only 9% higher at $1.52 having traded up to $2.97. The reason for the dramatic turnaround was probably a bit of reality set into investors once they had a look at Hycroft Mining and its financial condition. The main reason was a Bloomberg report saying that Hycroft Mining could do a $500 million share sale by as early as next Tuesday. We understand the sale is ongoing and being led by B.Riley Securities. AMC Stock Forecast We were quite negative on this deal on Tuesday and remain so. At least it is not a big investment for AMC, but it still reads poorly. This will not endear AMC stock to further credibility in our view. CNBC carried out a report yesterday about the surge in price and volume trading in HYMC stock before the AMC announcement: "Small mining firm with troubled history saw big spikes in stock price, trading volume ahead of AMC deal." Tuesday's move took AMC back up to our resistance level at $14.54, which was a key breakdown level. Below this and AMC remains bearish. Above $14.54 is neutral. We remain bearish on AMC with a target price of $8.95. AMC stock chart, daily Prior Update: AMC stock opened higher on Wednesday as the stock market remains on edge over the potential for some form of a peace deal in Ukraine. Oil prices falling sharply has also helped investor sentiment. AMC is currently trading at $14.77 for a gain of exactly 2% after 5 minutes of the regular session on Tuesday. Hycroft Mining (HYMC) stock is trading 4% lower at the same stage on Wednesday. Later we get the Fed interest rate decision which may hamper more progress from growth stocks but for now, it is full steam ahead. AMC is back among the top trending stocks on social media sites and interest seems high. $14.54 remains a key level for AMC to hold above if it wants to have put a bottom formation in place. Otherwise, it will return to the bearish trend and look to target $8.95 in our view.

S&P 500 wavered but is bound to get its act together in the medium term. Powell‘s statements shouldn‘t have stunned the bulls, but they did – the mere reiteration of the tightening plans coupled with remarks on the need to stamp out aggressive inflation before it‘s too late (anchored inflation expectations, anyone? I talked that in the run up to the Sep 2021 P&G price hikes and how the competition would be following in a nod to high input costs, with heating job market on top of the commodities pressure pinching back then already), sent stocks and bonds down.Add the recession fears that were assuaged during the Wednesday‘s conference, and you get the S&P 500 bulls having to dust off after Monday‘s setback. Given how early we‘re in the tightening cycle, and that the real economy isn‘t yet breaking down no matter what‘s in the pipeline geopolitically as regards various consequences to commodities, goods, services and money flows, the stock market bulls are still likely to take on the 4,600 as discussed already.Only this time, the upswing would be accompanied by a more measured and balanced commodities upswing, joined in by precious metals. Great profits ahead and already in the making.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is consolidating above 4,400, and the relative strength in value as opposed to tech, is boding well – the bulls are pushing their luck a bit too hard as a further TLT decline would pressure growth stocks.Credit MarketsHYG is getting under pressure again, but its decline would be uneven in the short run – as in I‘m looking for quite some back and forth action. First, higher in taking on yesterday‘s selling.Gold, Silver and MinersPrecious metals aren‘t turning lower in earnest – the miners‘ leadership bodes well for further gains, and is actually a very good performance given the hawkish Fed „surprise“ (surprise that wasn‘t, shouldn‘t have been).Crude OilCrude oil strength returning is a very good omen for commodities bulls broadly, and the rising volume hints at return of bullish spirits. The upswing is far from over – look how far black gold got on relatively little conviction, and where oil stocks trade at the moment.CopperCopper is acting strongly, and the downswing didn‘t entice the bears much. The path of least resistance remains higher, and the red metal isn‘t yet outperforming the CRB Index. Great pick for portfolio gains with as little volatility as can be.Bitcoin and EthereumBitcoin went on to recover the weekend setback – Ethereum upswing presaged that. They‘re both a little stalling now, but entering today‘s regular session on a constructive note. I‘m looking for modest gains extension.SummaryS&P 500 is bound to recover from yesterday‘s intraday setback – the animal spirits and positive seasonality are there to overcome the brief realization that the Fed talks seriously about tightening and entrenched inflation. While not even the implied readiness to hike by 50bp here and there won‘t cut it and send inflation to the woodshed, let alone inflation expectations, the recession fears would be the next powerful ally of stock market bears. For now though, we‘re muddling through generally higher (I‘m still looking for a tradable consolidation of last week‘s sharp gains), and will do so over the coming several weeks. The real profits are to be had in commodities and precious metals, as I had been saying quite often lately… Enjoy!Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.

The Swing Overview - Week 14 Equity indices weakened last week on news of rising interest rates and a tightening of the US economy. The euro is also weakening not only because it is under pressure from the ongoing war in Ukraine and sanctions against Russia, but also from the uncertainty of the upcoming French presidential election. The outbreak of the coronavirus in China has fuelled negative sentiment in oil, where the market fears an excess of supply over demand. The US dollar was the clear winner in this environment.  The USD index strengthens along with US bond yields According to the US Fed meeting minutes released on Wednesday, the Fed is prepared to reduce its balance sheet by the USD 95 billion per month from May this year.  In addition, the Fed is ready to raise interest rates at a pace of 0.50%. Thus, at the next meeting, which will take place in May, we can expect a rate increase from the current 0.50% to 1.00%. This option is already included in asset prices.     As a result of this the yields on US 10-year bonds continued to rise and has already reached 2.64%. The US dollar in particular is benefiting from this development and is approaching the level 100. Figure 1: US 10-year bond yields and USD index on the daily chart   Equity indices under pressure from high interest rates The prospect of aggressive interest rate hikes is having a negative impact on investor sentiment, particularly for growth stocks. However, it is positive for financial sector stocks. High yields on the US bonds are attractive to investors, who will thus prefer this yield to, for example, investments in gold, which does not yield any interest. Figure 2: SP 500 on H4 and D1 chart   The US SP 500 index is currently moving in a downward correction, which is shown on the H4 chart. Prices could move in a downward channel that is formed by a lower high and a lower low. The SP 500 according to the H4 chart is below the SMA 100 moving average, which also indicates bearish tendencies.   The nearest resistance according to the H4 chart is in the range of 4,513 - 4,520. The next resistance is around 4,583 - 4,600. A support is at 4 450 - 4 455.   German DAX index A declining channel has also formed for the DAX index. The price is below the SMA 100 moving average on the H4 chart, where at the same time the SMA 100 got below the EMA 50, which is a strong bearish signal. Figure 3: German DAX index on H4 and daily chart According to the H4 chart, the nearest resistance is in the range between 14,340 - 14,370. There is also a confluence with the moving average EMA 50 here. The next resistance is at 14,590 - 14,630. A support is at 14,030 - 14,100.   The DAX is influenced by the upcoming French presidential election, the outcome of which could have a major impact on the European economy.    The euro remains in a downtrend The Euro is negatively affected by the sanctions against Russia, which will also have a negative impact on the European economy. In addition, uncertainty has arisen regarding the French presidential election. Although the victory of the far-right candidate Marine Le Pen over the defending President Emmanuel Macron is still unlikely, the polls suggest that it is within the statistical margin of error. And this makes markets nervous.   A Le Pen victory would be bad for the economy and France's overall international image. It would weaken the European Union. That's why this news sent the euro below 1.09. The first round of elections will be held on Sunday April 10 and the second round on April 24, 2022.    Figure 4: EURUSD on H4 and daily chart. The nearest resistance according to the H4 chart is at 1.0930 - 1.0950. The significant resistance according to the daily chart is 1.1160 - 1.1190.  A support is at 1.080 - 1.0850.   According to the technical analysis, the euro is in a downtrend, but as it is currently at significant support levels, any short speculation could be considered only after the current support is broken and retested to validate the break.   The crude oil continues to descend The oil prices fell for a third straight day after the Paris-based International Energy Agency (IEA) announced it would release 60 million barrels of its members' reserves to the open market, adding to an earlier reserve release of 180 million barrels announced by the United States. In total, 240 million barrels would be delivered to the market over six months, resulting in a net inflow of 1.33 million barrels a day.   That would be more than triple the monthly production additions of 400,000 barrels per day by the world's oil producers under the OPEC+ alliance led by Saudi Arabia and controlled by Russia.   Adding to the negative sentiment on oil was a coronavirus outbreak in Shanghai, the largest in two years, which forced a more than week-long closure of China's second-largest city. This raises concerns about demand among oil consumers in the Chinese economy, which has a significant impact on prices. Figure 5: Brent crude oil on the H4 and daily charts. Brent crude oil is thus approaching support, which according to the H4 chart is at around USD 97-99 per barrel. The nearest resistance according to the H4 chart is at the price of USD 106 per barrel. The more significant resistance is at USD 111-112 per barrel of the Brent crude.   

FX Daily: US Treasury wobble unnerves risk assets A sell-off at the long end of the US Treasury market has cast a shadow over risk assets and hit cyclical currencies. The dollar has been the main beneficiary. Expect focus to very much remain on the US bond market into next week's quarterly refunding. For today, attention is on whether the BoE hikes 25bp or 50bp and how Brazilian assets react to the 50bp rate cut.   USD: Tracking Treasuries Wednesday's session was all about the US bond market and the sell-off at the long end of the curve. US 30-year Treasury yields were briefly 15bp higher. And far from the benign bullish disinversion of the curve we saw after the soft June CPI print, yesterday's move was a more negative bullish steepening. Higher risk-free rates hit US growth stocks (Nasdaq -2%) and also hit 'growth' currencies, such as the commodity complex and the unloved Scandi currencies. At the heart of yesterday's move was the US fiscal story. Despite the Democrat administration and its supporters in the media decrying Fitch's decision to remove the sovereign's AAA status on Tuesday evening, there is genuine concern over US fiscal dynamics. And it looks like the Fitch release was carefully timed. Yesterday also saw a slightly higher than expected US quarterly refunding announcement, where $103bn of 3, 10, and 30-year bonds will be sold next week. The fact that fiscal dynamics were in play yesterday was reflected in wider US asset swap spreads (Treasuries underperforming the US swap curve) and the US yield curve steepening. As above, higher risk-free rates are providing greater headwinds to risk asset markets - including equities. We are also seeing some slightly higher cross-market volatility readings which may prompt investors to partially de-risk from carry trade strategies (good for the Japanese yen and Swiss franc on the crosses, bad for the high yielders). We will also be interested to see how the Brazilian real performs today after Brazil's central bank started its easing cycle last night with a 50bp cut and promised similar magnitude cuts over coming meetings. The currency could edge a little lower today given the international environment. While the US Treasury story will be with us into next week's auctions, the focus today will be on the initial jobless claims (these have been moving markets) and the services ISM index. Barring a significant rise in claims or a big dip in the services ISM, it looks like the dollar will hang onto recent gains into what should be a decent US July nonfarm payrolls report tomorrow.    DXY could grind its way toward the 103.50 area.