Wednesday, February 17, 2021
Retail sales rebound in January. US retail sales rose 5.3% month over month in January according to the US Census Bureau, ahead of Bloomberg consensus forecasts of 1.1%. The surge in retail sales was the highest in seven months, a strong response following December’s 1% decline as fresh stimulus checks helped spur consumer demand following the headwinds caused by rising COVID-19 cases at the end of 2020. Further, strong January retail sales should remove much of the risk for the US economy to stall in the first quarter of 2021.
US stocks opened lower as yields slip from highest level since February 2020
- European markets modestly lower on softer than expected retail earnings
- Asian markets mixed overnight with the Hang Seng Index outperforming
Crude up again. West Texas Intermediate crude oil (WTI) is above $60/barrel and up another 1% this morning, with multiple drivers.
- Historically cold weather in Texas has limited overall US production by approximately one-third.
- Global demand from India and China are quickly improving, while OPEC production cuts from last year are still in play.
- We’ve grown more optimistic on energy recently. We upgraded our view on crude oil, and then this month upgraded our view on energy stocks at the start of 2021. Read more about these upgrades and the reasons why in our Global Portfolio Strategy.
Is this really a calm stock market? There is plenty of talk how volatile things are, but we’d say things are actually quite calm.
- The CBOE Volatility Index (VIX) recently closed beneath 20 for the first time since before the pandemic.
- The past 3 times the S&P 500 Index was lower were by only 0.06%, 0.03%, and 0.11%. The last time three days were lower by that small of an amount was in December 2019.
Technical update. Large cap indexes were little changed Tuesday; however, energy returned 2.3% and financials gained 1.8%. The S&P 500 Index Financials sector has gained 10.7% so far in February, decisively breaking out above the 2007, 2018 and 2020 highs for the sector.
The United States reported 56,000 new COVID-19 cases, down 39% week over week, although severe weather in the Midwest may be affecting reports (source: COVID Tracking Project).
- The European Union finalized an agreement with Pfizer/BioNTech for an additional 200 million vaccine doses.
- Japan begins first doses of vaccine administration following last week’s approval of the Pfizer/BioNTech vaccine.
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