Nasdaq -1.5% Russell + 1.5% rotation continues big tech into small cap, growth into cyclicals call it what you like but the rotation is on for now. Helping with this rotation is that Amazon is hit by an EU complaint of antitrust violations -BBG .Amazon -2% as worries about some type of Fine or penalty grow .Most of Big tech is trading lower pre open as they may be next in the EU antitrust campaign.
Another sector going through a rotation is European banks ~+19% Since Friday above the 200-day MA for first time since February, yesterday’s volume in the Stoxx 600 banking group was the highest in 7 months.
Yesterday Euphoria surrounding vaccine Wearing off a bit, Pfizer news was very good but from what I read the sample size is only 100 people and plenty of tests still need to be done before any type of roll out. From reuters “ There were over 59,000 COVID-19 patients in hospitals across the United States on Monday, the country’s highest number ever of in-patients being treated for the disease, with new infections at record levels for the sixth consecutive day.”
Big move in Global yields yesterday US 5,10s 30s above 200 D MA or right on it in cases of 5 years. I use 200 D MA as a trend indicator and by doing so could indicate a shift to higher trending yields. This is early days for the move but something that has caught my eye.10-year auction today and 30 year tomorrow let’s see if demand increases due to higher rates. From Goldman sachs via IFR news “Monday afternoon the bank published research that, after a 12bp rally to higher 30-year Bund yields (ultimately 13bp according to Eikon data), the market had moved “around one third of the full move implied by (GS) estimates of the vaccine growth boost”. The bank expands that by its estimates “European duration is pricing rich to current growth expectations and by our estimates long-end core yields would receive the biggest increase from an early vaccine growth boost.”
Regarding sovereign spreads to Bunds, it adds they are “already pricing a substantial increase in expected balance sheet size, suggesting the hurdle for the ECB to compress spreads and flatten core curves is high.”
Yesterday CPI and PPI both indicated that the “ disinflationary trend”-BBG strengthen in October and further “can’t rule out possibility of CPI turning negative “ Oh No lower PPI not good for commodity demand How can china Export inflation to rest of world if Her price levels are slipping towards zero, also simplistic definition no demand =lower prices a negative sign for World growth? Pork prices dropping one of the Big reasons for lower CPI