In this week's Macro Insight I discussed...
As we approach 4200 on the SPX, markets are losing momentum ahead of key earnings from the mega cap technology stocks. News on capital gains tax hikes was taken well by the market. Systematic investors may still have room to buy and support markets along with corporate buybacks over the summer.
Keep an eye on treasury yields as they will likely determine where equity leadership comes from. Global bond yields rising on the back of stronger macro data even in Europe may help lift US yields back up. Most economists are looking at Q4 as a start to tapering from FOMC. Inflation numbers are rising and expectations of further rises are evident from earning calls.
So far Netflix and Tesla earnings have been a bit of a let down and stocks have sold off post numbers. This week if we see similar price action from the remaining FANGS, that could take broader markets lower. We like the RUT/NDX spread as way to play the rotation back to value.
India markets managed to stage a bounce despite the COVID situation on the ground. Europe looks to be the value play assuming US growth peaks in Q2 passing the baton onto Europe in Q3. DAX has consolidated, working off its overbought condition making July DAX upside calls an interesting play with implied vols in the low to mid teens
Apart from FOMC on Wednesday which should not be market moving, the earnings reports from the big tech stocks will be the primary driver.
Stuck around key support around 91 on DXY. A conclusive break lower below 90.5 will likely see more selling.
Copper and grains are going parabolic to the upside on strong fundamentals. Gold and Oil remain muted on a relative basis.
Filmed on on Tuesday 27th April 2021.
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