Markets continue to optimize the fiscal stimulus of President Joe Biden’s new administration. The S&P 500 rose 1.39% to a high yesterday, the best increase since the opening day in 36 years.
It may not last. Our call of the day is from Citi’s C,
reported on investment issues for 2021 and the bank said there is “a significant likelihood of financial turmoil” in the markets.
Equity index valuations are at high levels, taking advantage of possible credit declines and there is the possibility of inflation surprises this year, said Citi, which supported strategists ’projections.
According to the bank, financial valuations are not consistent with real measures such as gross domestic product “by virtually every metric.” This charges the weapon to trigger a turbulence trigger.
It could be inflation. The COVID-19 pandemic has laid the groundwork for inflation rates to be volatile in 2021. Although Citi said there is “little underlying support” for sustained inflation, the loss of prices due to the effect of the blockages and the corresponding year-on-year base effects could scare markets.
A wave of turbulence could also be triggered by slowing down central bank purchases. Projections suggest that both the pace of purchases and purchases of net assets will slow this year. Given that purchases of net assets are the main route between monetary policy and the real economy, Citi said a change in these patterns could surprise markets “no matter how much central banks try to communicate by come in”.
According to the investment bank, any turmoil is likely to affect the equity and credit markets, because these asset classes currently have higher volatility than recent norms.
So what should investors do? Citi recommends buying the next dive.
The investment bank’s global market checklist records 8/18 red flags since the last rally, which is the highest mark since 2009. The US market has 9.5 red flags while in Europe it is lower, with 5.
This indicates a fair amount of “foam” in the markets: the more frothy, the less inclined Citi’s model is to buy the dip. But it is still enough.
The buzz
Biden went to work Wednesday by reversing some of former President Donald Trump’s signature policies. He signed 15 executive orders, which include repealing the immigration ban from predominantly Muslim countries, revoking the permit for the Keystone XL pipeline and starting the process of rejoining the Paris climate agreement.
Attention is now directed at introducing a $ 1.9 trillion plan through Congress to help the pandemic-ravaged economy, including sending $ 1,400 of stimulus control to Americans .
Amazon AMZN Online Distributor,
has offered to leave its weight behind the new government’s promise to increase the distribution of COVID-19 vaccines in the United States, saying it could help Biden achieve its goal of vaccinating 100 million Americans in the next 100 days.
On the economic front, all eyes are on the job reports posted today. Initial unemployment claims on Jan. 14 reached 900,000, less than the expected 935,000 and a surprise drop from 965,000 last week. On January 9, there were about 5 million continued claims for unemployment.
December home start figures reached 1.7 million, above expectations.
Three Chinese telecommunications giants: China Telecom 728,
China Mobile 941,
and China Unicom 762,
– have asked the New York Stock Exchange to review its decision to withdraw them in accordance with Trump-era policy.
Consumer product giant Unilever ULVR,
has said that by 2030 it will ensure that all workers in its extensive supply chain receive a living wage from their employers. The multinational is behind brands such as Soap Ben & Jerry, Hellmann, Q-Tips and Dove.
The markets
It looks like a positive day ahead after yesterday’s big rally. Futures on the stock market are slightly higher than YM00,
ES00,
NQ00,
ready for a smooth but strong opening with the Dow aiming at around 70 points. Asian markets NIK,
HSI,
SHCOMP,
generally met while the European markets UKX,
DAX,
PX1,
they continued their advance. The pan-European Stoxx 600 SXXP,
has increased eight in the last 11 days.
The graph
Trump’s days in the White House are history, with the stock market performance he presided over now for books. Our Deutsche Bank DBK day chart,
shows that Trump led the United States to the second best performance of the S&P 500 since the Great Depression, in annualized terms. Bill Clinton, president of the dot-com bubble in the late 1990s, ranks first.
Random readings
Hell to pay for: the suspicion of fire shakes the community of the Church of Satan.
A woman sentenced to death in 2017 is struggling to be declared alive.
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