Financial data and economic news for the week ending January 29, 2021

 Source:
http://creditbubblebulletin.blogspot.com/2021/01/weekly-commentary-great-2021-squeeze.html

Friday, January 29, 2021
The Great 2021 Squeeze Mania
by Doug Noland

Following is my 

highly edited 

easy to read version 

of the full column 

at the link above:

For the week ending
January 29, 2021:

GLOBAL  STOCK  MARKETS
S&P500 dropped 3.3%
   (down 1.1% year-to-date)

DowIndustrials fell 3.3%
   (down 2.0%)

Utilities declined 1.3%
   (down 0.6%)

Transports sank 6.0%
    (down 3.3%)

S&P 400 Midcaps fell 5.0%
    (up 1.5%)

Small cap Russell 2000 dropped 4.4%
   (up 5.0%)

Nasdaq100 lost 3.3%
   (up 0.3%)

Biotechs slumped 2.9%
   (up 4.3%).

With gold bullion slipping $8,
the HUI gold stock index fell 1.8%
    (down 5.3%)

U.K.'s FTSE dropped 2.9%
   (down 2.7% y-t-d)

Japan's Nikkei sank 3.4%
    (up 0.8% y-t-d)

France's CAC40 fell 2.9%
    (down 2.7%)

German DAX slumped 3.2%
    (down 2.1%)

Spain's IBEX 35 sank 3.5%
    (down 3.9%)

Italy's FTSE MIB index fell 2.3%
    (down 3.0%)

Brazil's Bovespa declined 2.0%
   (down 3.3%)

Mexico's Bolsa lost 3.8%
    (down 2.5%)

South Korea's Kospi sank 5.2%
    (up 3.6%).

India's Sensex dropped 5.3%
    (down 3.1%)

China's Shanghai fell 3.4%
    (up 0.3%).

Turkey's Istanbul National 100
index lost 4.5%
    (down 0.2%)

Russia's MICEX stumbled 3.1%
    (down 0.4%)

US  BONDS  &  MORTGAGES

Ten-year US Treasury bond yields

declined two bps to 1.07% 

    (up 15bps year over year)

Federal Reserve Credit
over the past year,
expanded 80%.

M2 money supply surged
27.3%, over the past year.


Freddie Mac 30-year
fixed mortgage rates
fell four bps to 2.73%
   (down 78bps year-over-year).

Fifteen-year rates
slipped a basis point to 2.20%
    (down 80bps).

Five-year hybrid ARM rates
were unchanged at 2.80%
    (down 44bps)

Jumbo mortgage
30-year fixed rates
down two bps to 2.89%
    (down 85bps)

COMMODITIES:

January 27 – Bloomberg (Marcy Nicholson):

“With U.S. lumber prices at fresh record highs, construction companies and wood wholesalers are buying just enough to get by, threatening to make price swings even bigger. Lumber futures in Chicago reached a record $855.10 per 1,000 board feet…, having surged more than 30% since Jan. 12. This price surge during what is typically a winter lull has surprised the industry ... ”

Bloomberg Commodities Index
rallied 1.2%
   (up 2.6% y-t-d)

Spot Gold slipped 0.4% to $1,848
    (down 2.7%)

 Silver surged 5.3% to $26.914
    (up 1.9%)

WTI crude dipped 7 cents to $52.20
    (up 8%)

Gasoline added 0.3%
   (up 10%)

Natural Gas jumped 4.8%
   (up 1%)

Copper fell 1.9%
    (up 1%)

Wheat jumped 4.5%
   (up 4%)

Corn surged 9.3%
   (up 13%).

Bitcoin rallied $1,319
or 4.0%, this week to $34,641
   (up 19.2%).


 For posterity:
GameStop gained +400%,
AMC Entertainment +278%,
Express +235%,
Siebert Financial 122%,
Cel-Sci 75%,
Novavax 74%,
Vaxart 68%,
Fulgent Genetics 60%,
Vir Biotechnology 59%,
National Beverage 54%, and
Fossil 47%.

Retail vs. the Hedge Funds.
Main Street Beating Wall Street.

Things get crazy
at the end of cycles.

It’s worth recalling
the Nasdaq lost 78%
of its value in 30 months
when that Bubble burst
in 2000.


COVID  NEWS:
January 28 – Associated Press (Michelle Liu and Mike Stobbe):
“A new coronavirus variant identified in South Africa has been found in the United States for the first time, with two cases diagnosed in South Carolina, state health officials said… The two cases were discovered in adults in different regions of the state and do not appear to be connected. Neither of the people infected has traveled recently…”

January 25 – CNBC (Berkeley Lovelace Jr.): 

“The Minnesota Department of Health said… it has confirmed the first known U.S. case of a more contagious coronavirus variant originally found in Brazil.”

January 24 – Wall Street Journal (Stephen Fidler):
“The emergence of new variants of the virus that causes Covid-19—including one in the U.K. that British officials say could be more deadly than earlier versions—signals a future in which health authorities are locked in a cat-and-mouse battle with a shape-shifting pathogen. ...‘We’re living in a world where coronavirus is so prevalent and rapidly mutating that there are going to be new variants that pop up,’ Anthony Harnden, a physician who advises the U.K. government, told Sky News. ‘We may well be in a situation where we end up having to have an annual coronavirus vaccine’ to cope with emerging strains.”

 

January 26 – Bloomberg (Christopher Palmeri and Emma Court):
“California and other large states are loosening Covid restrictions just as scientists warn that more-contagious variants of the virus are beginning to take hold in the U.S. and the vaccine rollout struggles. With a two-month spike in cases beginning to subside, California Governor Gavin Newsom is lifting the state’s stay-at-home order. New York, Illinois, Michigan and Massachusetts also are easing restrictions. The shift comes as new Covid-19 cases and hospitalizations are declining. Still, the new variants… are setting off alarms…”

January 29 – CNBC (Berkeley Lovelace Jr.):

 “Johnson & Johnson said Friday its single-dose coronavirus vaccine was 66% effective overall in protecting against Covid-19. The vaccine, however, appeared to be less potent against other variants.”

ALL  OTHER  NEWS:

January 28 – Bloomberg (Michael P. Regan and Vildana Hajric):
“ ... on Wednesday  ... More than 23.6 billion shares of U.S.-listed equities changed hands, the most in Bloomberg data going back to 2008 ... averaging 14.4 billion a day in 2021 before yesterday and 10.9 billion last year. That compares with an average of less than 7 billion shares in 2019.”

January 28 – Financial Times (Philip Stafford, Alice Kantor and Leo Lewis):
“Membership of Reddit’s r/WallStreetBets community, where amateur investors gather and share tips, has exploded in recent days. Between Wednesday and Thursday this week, the number of users rose from 2.8m to 4.3m, with about 316,000 people announcing on the platform that they were buying options, up from a little more than 60,000 on Wednesday.”

January 26 – Bloomberg (Vildana Hajric and Katherine Greifeld):
“Flush with winnings in stocks like GameStop Corp. and Tesla Inc., the smallest options traders, those who buy or sell 10 or fewer contracts at a time, have piled into record bullish bets in the last three weeks, adding nearly 60 million call options, ...  That’s 20% above the volume late summer, itself a period of unprecedented exuberance.”

January 27 – Financial Times (Laurence Fletcher):
“ ...  Tesla itself has moved to 209 times expected earnings. ‘Nobody cares if you’re profitable these days,’ said the… head of one large hedge fund…”

January 26 – Bloomberg (Ksenia Galouchko and Lucca de Paoli):
“...U.S. fuel-cell maker Plug Power Inc., for instance. The unprofitable company’s more than 2,000% rally since early 2020 outpaces even Tesla Inc’s.”

January 26 – Bloomberg (Justina Lee):
“... The 50 most-shorted companies on the Russell 3000 Index have now surged 33% so far this year, with the Goldman Sachs… basket set for its best month since at least 2008.”

 

January 27 – Bloomberg (Katherine Greifeld):
“Now, Wall Street is scanning for which of the market’s most-hated shares could be targeted next. It’s simple, though not necessarily intuitive: identify a company with huge levels of short interest, and pile in.”

January 25 – Bloomberg (Cecile Gutscher and Sam Potter): 

“Across Wall Street, signs of speculative excess are everywhere. Penny stocks surging. Cash pouring into trendy thematic bets. Risky debt paying less than ever. With unchecked animal spirits and historic valuations, what’s an investor to do? Keep buying, apparently. ... It’s all spurring the likes of Citigroup Inc. and JPMorgan... to warn of market excess in everything from blank-check companies to cryptocurrencies. Yet as fresh stimulus beckons, Wall Street firms are telling money managers to stay largely invested in rallying stock benchmarks.”

January 25 – Washington Post (David J. Lynch): 

“The cost of shipping a container of goods has risen by 80% since early November and has nearly tripled over the past year, according to the Freightos Baltic Index.”

January 28 – Reuters (Doina Chiacu and Susan Heavey):

 “U.S. Senator Bernie Sanders urged the Senate… to move forward with a reconciliation process that would make it easier to pass a large coronavirus economic relief bill. ‘If Democrats are to address the enormous crises facing working people, and keep faith with the campaign promises we made, we must go forward aggressively with the Senate reconciliation process. There is no alternative. Now is the time for bold action,’ Sanders said…”

January 26 – Bloomberg (Eric Martin):
“The U.S. must take ‘aggressive’ steps to combat China’s ‘unfair’ trade practices while also investing to bring manufacturing back to the country, said Gina Raimondo, President Joe Biden’s nominee for Commerce secretary. ... ‘China has clearly behaved in ways that are anti-competitive -- dumping cheap steel and aluminum into America, which hurts American workers and hurts the ability of our companies to compete,’ Raimondo, who has served as governor of Rhode Island since 2015, said…”

January 23 – Bloomberg (Jennifer A. Dlouhy):
“Hours after taking office, President Joe Biden made good on a campaign promise to cancel the Keystone XL oil pipeline. Later that day his Interior Department mandated that only top agency leaders could approve new drilling permits over the next two months. Next week, according to people familiar with the plans, Biden will go even further: suspending the sale of oil and gas leases on federal land, where the U.S. gets 10% of its supplies.”

January 26 – Bloomberg (Alex Tanzi and Catarina Saraiva):
“The end of 2020 brought the sharpest rise in the U.S. poverty rate since the 1960s… Economists Bruce Meyer, from the University of Chicago, and James Sullivan of the University of Notre Dame found that the poverty rate increased by 2.4 percentage points during the latter half of 2020… That percentage-point rise is nearly double the largest annual increase in poverty since the 1960s. This means an additional 8 million people nationwide are now considered poor. Moreover, the poverty rate for Black Americans is estimated to have jumped by 5.4 percentage points, or by 2.4 million individuals.”

January 28 – Reuters (Lucia Mutikani):

 “The U.S. economy contracted at its deepest pace since World War Two in 2020 ... Gross domestic product decreased 3.5% in 2020, the biggest drop since 1946… That followed 2.2% growth in 2019 and was the first annual decline in GDP since the 2007-09 Great Recession.”

January 28 – CNBC (Jeff Cox):
“Gross domestic product, or the sum of all goods and services produced, increased at a 4% pace in the fourth quarter, slightly below the 4.3% expectation.”

January 26 – CNBC (Diana Olick):
“The surge in home prices ... Prices nationally rose 9.5% in November, compared with November 2019, according to the S&P CoreLogic Case-Shiller… That is the strongest annual growth rate in over six years… It also ranks as one of the largest annual gains in the more than 30-year history of the index."

January 28 – Zillow (Matt Speakman):
“...2020 will still go down as the best year for new home sales since 2006 … an estimated 811,000 new single-family homes were sold in 2020, up almost 20% from 2019. The median sales price of new houses sold in December was $355,900, up 8% year-over-year.” 

January 22 – Wall Street Journal (Karen Langley):
“Public companies have been taking advantage of a hot stock market by issuing shares at record pace in January. U.S.-listed companies have conducted 80 follow-on stock offerings this year through Friday, raising $16.35 billion. Both numbers are records for this point in the year, according to Dealogic…

January 26 – Wall Street Journal (Will Parker and Peter Grant):
“ ... Owners of multifamily buildings are falling behind on loan payments. ... During the pandemic, the share of total apartment debt that banks place into their highest-risk categories has ballooned to 16.9% from 4.6%, according to… Trepp LLC…”

January 28 – CNBC (Lauren Thomas):
“One retail research and advisory group predicts as many as 10,000 stores could be closed in the United States this year, which would set a new record… The 10,000 closures would represent a 14% uptick from 2020 levels, Coresight Research said…”

January 25 – Bloomberg (Carolina Gonzalez):
“U.S. junk bond sales set a new January record as low yields allow companies to sell bonds at a breakneck pace. NGL Energy Partners LP took supply over the edge to $38.045 billion … The previous record was set last year at $37.2 billion.”

January 26 – Bloomberg:
“China’s recovery picked up speed this month, putting it further ahead of rivals after recent data showed it was likely the only major economy to have grown in 2020. An aggregate index combining eight early indicators tracked by Bloomberg increased by one step from last month, led by strong performances in exports, property and the stock market.”

January 24 – Wall Street Journal (Paul Hannon and Eun-Young Jeong):
“China overtook the U.S. as the world’s top destination for new foreign direct investment last year, as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy. New investments by overseas businesses into the U.S., which for decades held the No. 1 spot, fell 49% in 2020, according to U.N. figures…”

January 29 – Reuters (Dave Graham and Abraham Gonzalez):
“Mexico’s economy last year suffered its biggest annual contraction since the 1930s, although it recovered better than expected from the impact of the COVID-19 pandemic during the final quarter… Gross domestic product (GDP) in Latin America’s second-biggest economy shrank by 8.5% last year…”

January 25 – Reuters (Ritsuko Ando): 

 “Prices of newly-built apartments in the Tokyo area rose 1.7% last year, approaching the record highs seen during Japan’s asset-inflated bubble era that ended in the early 1990s…”

 

January 27 – Bloomberg (Kit Rees):
“Some of Europe’s most-shorted stocks surged again on Wednesday, led by Evotec SE and Pearson Plc, in an echo of a similar rally in the U.S., where retail investors have battled against short sellers by piling into names like GameStop Corp.”