As we kickoff the final two trading days of the week, here is a look at rip roaring recovery plus a few other big surprises.
March 25 (King World News) – Peter Boockvar: Let’s do a market sentiment check. Individual investors are very bulled up along with confidence amongst ‘professional’ investors. AAII said its survey saw Bulls rise 2 pts on the week to 50.9. That is the most since mid November. Before that one print last year you have to go back to January 2018 the last time Bulls were this high. (See chart below).
Stock Market Bulls 2nd Highest Level In 3 Years
Bears fell 3 pts to 20.6 and that is the least since December 2019 and not far from the lowest since January 2018. (See chart below).
Fewest Stock Market Bears Since 2019
This follows yesterday’s II figures which saw Bulls up at 57.4 from 55.9 in the week prior. Bears fell to 18.8 from 19.6. Bulls above 55 is stretched and a spread above 40 is as well which we are just below. Last week’s Citi Panic/Euphoria index saw a moderation to 1.17 from near 2 in January but that is still 3 times the threshold of Euphoria.
Market Sentiment Remains Euphoric
Bottom line, there is still a feeling of invincibility on the part of market players and the individual giddiness follows the massive amount of money that is piling into funds and ETF’s with a record equity inflow in February. Optimism with the vaccine and economic rebound has definitely offset any worries about the rise in interest rates, for now, notwithstanding the sensitivity seen in the expensive parts of the market to yields…
ALERT:
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Business confidence in France in March saw a nice increase to 97 from 90 and that was well better than the estimate of 91.
French Business Confidence Continues To Surge
The vaccine optimism was obvious here as the increase was led by services, retail trade and employment. Manufacturing was unchanged m/o/m but holding at the highest level in a year.
ECB Steps Up Bond Buying To Lower Yields
Consumer confidence in Germany rose to -6.2 from -12.7 and well better than the estimate of -12.1. Between this figure and the French business confidence number it is clear that people are looking past the current vaccine roll out travails and to what is ahead when most have some form of immunity and the weather gets nicer. The euro though is unchanged on the day after a run of declines in 7 of the last 9 days. European bond yields are also down again with the German 10 yr bund yield lower for the 5th straight day and which is also calming US Treasuries. The stepped up ECB purchases has also helped to lower yields but what happens when the front loading ends? Yields will go right back up again.
Rip Roaring Recovery
The chief economist of the Bank of England Andy Haldane who has been a more hawkish one is pretty positive on the economy. Referring to the large amount of savings consumers have stock piled over the past year:
“If some of those savings do get spent, even a small amount of them, we’re talking about a pretty rip roaring recovery. When it comes, it will come fast, and it will be large.”
He didn’t say anything about monetary policy but the pound is higher for the 1st day in 6. The 10 yr inflation breakeven is up 1.4 bps to 3.51%, the highest in 13 years.
China Boom
Distorted by the Chinese new year, Hong Kong said its February exports rose by 30.4% y/o/y vs the estimate of up 28.4%. Exports to China did rise 32% y/o/y and to the US by 35%. If we take January and February together to smooth out the noise, exports were up by 38% y/o/y “reflecting a further pick up in growth momentum alongside the revival of global trading and production activities” and easy comps. Imports grew by 17.6% y/o/y compared with the forecast of up 22.2%. The Hang Seng was unchanged overnight and after a tough run the A shares in China were also little changed but H shares were down another 1% taking them to flat on the year.
To listen to one of the best audio interviews of 2021 with Matthew Piepenburg CLICK HERE OR ON THE IMAGE BELOW.
To listen to Alasdair Macleod discuss the gold and silver markets and what to expect next CLICK HERE OR ON THE IMAGE BELOW.
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