US stocks will open higher after the Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
closed at record highs last week.
It occurs as the performance of the U.S. Treasury TMUBMUSD10Y at 10 years,
remained stable at 1.619%. However, attention will quickly focus on Wednesday’s Federal Reserve meeting, which has become key in the context of rising bond yields in recent weeks. The central bank is under pressure to prevent a further destabilizing rise in yields.
In ours call of the dayJPMorgan strategists said the increase in bond yields was not over yet and that it was premature to start selling cyclical stocks and buying defensive stocks, such as health and technology stocks.
Investment bank strategists, led by Mislav Matejka, said valuations of cyclical stocks (those that will gain as economic activity picks up) were beginning to look “superior” after their strong performance during the last year.
European cyclists, for example, have outperformed defensive actions by 57% in the last 11 months, ranking on the top when it comes to past recoveries. As a result, they said most cyclical / defensive moves “could be left behind,” given the size of the cycles executed and their valuations stretched.
But strategists warned it was still “premature” to position itself for an investment. “To do this, we need to see the maximum PMIs, weaken relative profits and end the rise in bond yields,” they noted.
These three crucial things are unlikely to happen yet, they said, with a gain boost for cyclists that will continue to “accelerate over the coming quarters.” In terms of purchasing manager indices, the asynchronous nature of the global cycle (with China potentially at full intensity, the United States approaching highs and Europe wanting to recover over the summer) means that a peak is not it is imminent, they said.
The key factor for cyclicals remains the direction of bond yields, and most importantly, JPMorgan strategists said the improvement in yields was not yet over. “Yes, in the short term, political leaders will continue to decline, but [they] they are likely to accept higher yields as the economy strengthens. ”
“As yields increase, no cycles should be sold,” they added.
Stocks, on the other hand, continue to look very attractive, JPMorgan said, as it focused its long positions on banks and reopening trading.
The graph
Deutsche Bank DB,
strategists improved the S&P 500 earnings per share (EPS) forecast for $ 2021 to $ 202 and $ 202 to $ 202 in 2022, after passing the $ 1.9 trillion stimulus package and updates to the economic forecast.
Source: Bloomberg Finance LP, Haver, Deutsche Bank Asset Allocation
The tweet
The value of short bets on shares of special purpose acquisition companies (SPACs) has tripled since the beginning of the year, according to data from S3 Partners published by the Wall Street Journal.
The markets
US stock futures YM00,
ES00,
NQ00,
pointed slightly higher in front of the open. European equities made more significant gains with the pan-European Stoxx 600 index, which rose 0.6% in early operations. Asian markets mixed overnight as investors awaited the Fed meeting.
The buzz
Bitcoin BTCUSD,
prices hit a record on Saturday, surpassing the $ 60,000 mark. According to CoinDesk, the cryptocurrency has fallen back and traded for the last time at $ 56,272.
Elon Musk has officially changed his title to “Technoking,” according to a Tesla TSLA,
presentation released Monday.
Mexican President Andres Manuel Lopez Obrador on Sunday criticized the U.S. government, saying the United States has not helped Mexico with COVID-19 vaccines.
Danone BN,
The president and chief executive, Emmanuel Faber, will resign, the board of directors of the French food group confirmed on Monday. It is taking place amid pressure from activist investors in recent months.
Swiss pharmaceutical company Roche Holding ROG,
said Monday it agreed to acquire GenMark Diagnostics GNMK,
in a deal valued at approximately $ 1.8 billion.
Digital payments company Stripe said Sunday it has closed a $ 600 million round of funding that values it at $ 95 billion, more than double its valuation a year ago.
Beyoncé and Taylor Swift made history at the Grammys, where the best awards were won by women musicians.
Random reading
Father and son discover the World War I death tunnel hidden in France for a century.
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