SP500 futures have accelerated to new ATHs this morning following the news of the Moderna vaccine, said to produce a 95% effective rate. This is music to the markets ears, especially after the broad acceleration of Covid-19 cases across the US last week. If you are bearish of this market, I’d heed caution going forward. The rotation trade is underway, focusing on underperforming assets of 2020 and now pricing in a global economic acceleration in 1H2020. Whether you like that trade or not, this is what’s happening. Vaccine news, the outlook and promise for more stimulus, a weakening USD, and global outlook for growth/inflation accelerating next year are all contributing to this morning’s move in equity futures.
Running back last week:
USD: +52pts or +0.5% and bouncing off of the overnight lows to 92.80. The question we’re asking ourselves is what’s next for the Dollar? The Fed doesn’t meet until mid-December, will we get hints of more stimulus aka dollar devaluation prior to then? Or is there a small pocket for the Dollar to bounce?
Oil: +7.5% w/w and +3.74% this morning. Oil has lagged the rest of the commodity complex in recent weeks – and now, as aforementioned, there seems to be a broadening focus on the “under-loved” of 2020. Oil has immediate upside to 42.77 to the top of our range.
Gold: -3.4% w/w and -0.75%. Gold has shown us weakness over that last 2 weeks, and appears to be on the cusp of a break lower. Taking out 1850 would likely send us back to 1805-1785 zone. I like Silver, Copper, and Platinum much better at the moment than Gold.
Copper: +0.6% w/w and powering higher this morning +2.22%. A very powerful pattern in Copper, with Scenario 2 globally pending as well as the high potential for infrastructure spending, a tear higher in Copper could very well be pending.
SPY +0.91% NQ -0.25% RTY +1.98%
GER +1.21% FRA +2.18% UK +1.92%
China +1.11% Kospi +1.97%