Same View, Different Day

Whatever trigger you want to pin it on, the result is pretty much the same.

Published in

TRACKRECORD DAILY

6 min readAug 24, 2021

Just when it looked like it was all going to crap out, the US stock market rallied hard. The trigger this time was the FDA’s full approval of the Pfizer-Biotech vaccine, but the approval is not really a surprise.

Whatever trigger you want to pin it on, the result is pretty much the same. Higher asset prices at the end of the day. Same view, different day but sometimes, it is just that uncomplicated.

Market Observation

If you need another reason to be bullish…

Baltic Dry Index (20 year Chart)

The chart shows that shipping rates are the highest they have been in the last 10 years. Demand for shipping is high as the recovering economies need commodities and the pent-up demand of consumers need to be met.

Forget all the pessimism, numbers don’t lie.

DAY AHEAD

No significant data releases today. Risk sentiment will once again be driven by US stock performance and Covid developments.

TRADING PLAN

1. Currencies:

Keep short USD and long NZD, & CNH. The strong bounce in the US stock market sapped the strength of the USD. For now, it’s all about risk sentiment and the broad USD move.

2. Commodities: Uranium & Energy — The energy complex bounced back sharply as news that Pfizer- Biotech vaccine’s full approval by the FDA will lead to the resumption of the reopening of global economies. Stay the course!

Key risks: Spread of the delta strain, and comments from Fedspeakers regarding the tapering process are the key drivers of risk sentiment for now.

3. Equities:

Equity Index: Long Nasdaq futures. Same view, different day . Stay long and patient. Look to buy dips on approach of support levels at 13950–14000.

Single Stocks: Every dip is a chance to get involved. Don’t miss out on the asymmetric opportunities we have highlighted in our TrackRecord Model Portfolio.

Key risks : Spread of the delta strain, and Fedspeakers comments on the tapering process will dictate the market risk sentiment for now.

WHAT HAPPENED YESTERDAY

Market movements as of New York Close 23 Aug 2021

US PMIs came in poorer than expected with Manufacturing PMI at 61.2 vs 62.4 expected and Services PMI at 55.2 vs 59.4 expected. The weaker numbers indicate that recovery is slowing and the Federal Reserve need not be in a hurry to start tapering its bond buying programme. This sentiment was shared by Dallas Fed President Kaplan (voter in 2023, hawkish) who is open to adjusting his views on tapering depending on the persistence of the Delta variant.
Optimism arising from the US Food & Drug Administration’s (FDA) approval of the Pfizer–BioNTech vaccine and the UK’s readiness to order 35.00 million doses of Pfizer vaccine boosted risk sentiment greatly. The S&P 500 (+0.85%), Dow Jones (+0.61%), Nasdaq 100 (+1.46%) & Russell 2000 (+1.65%) all jumped higher on that optimism.
On the back of the improved risk sentiment, the US Dollar weakened once again, ending the day -0.52% lower with commodity and risk currencies (CAD, AUD, NZD) making the most ground as the retracement after Friday’s stop loss runs continues.
US yields were relatively flat with the US 2-year Treasury Bond yield and 30-yr yield unchanged and the 10-yr yield lower by 1 basis point to 1.25%.
New Zealand Retail Sales beat the expectations of 2.4% by quite a margin coming in at 3.3% (actual) this morning. There wasn’t much of an impact on the NZD as the focus still is very much on the Covid situation in NZ and the overall market risk sentiment.

HEADLINES & MARKET IMPACT

Dividend payouts to hit $1.4 trillion in 2021, nearing pre-pandemic levels, research shows

Notable Snippet: Dividends paid to investors are projected to hit $1.39 trillion in 2021, reflecting a recovery that’s stronger than expected, according to a new report from British asset manager Janus Henderson.

The 2021 forecast for dividends is just 3% below the pre-pandemic peak, the firm found.

Dividend payments in the second quarter jumped 26% from the same period last year to $471.7 billion, just 6.8% below the levels seen in the second quarter of 2019.

COMMENTS/IMPACT: Dividends are paid when companies are generating excess profits and have the cash flow to return the profits to investors. This is a strong sign that the economic recovery is strong and most companies are generating profits.

PayPal launches its cryptocurrency service in the UK

Notable Snippet: The U.S. online payments giant said Monday it would let British customers buy, hold and sell digital currencies, starting this week.

It marks the first international expansion of PayPal’s crypto product, which first launched in the U.S. in October last year.

PayPal’s crypto feature lets customers buy or sell bitcoin, bitcoin cash, ethereum or litecoin with as little as £1. Users can also track crypto prices in real-time, and find educational content on the market.

Like the U.S. version of the product, PayPal is relying on Paxos, a New York-regulated digital currency company, to enable crypto buying and selling in the U.K. PayPal said it has engaged with relevant U.K. regulators to launch the service.

COMMENTS/IMPACT: The entry of mainstream payment service PayPal will signal the middle of the early majority wave. Learn to embrace new technology or eat the dust.

Israel finds COVID-19 vaccine booster significantly lowers infection risk

Notable Snippet: A third dose of Pfizer’s COVID-19 vaccine has significantly improved protection from infection and serious illness among people aged 60 and older in Israel compared with those who received two shots, findings published by the Health Ministry showed on Sunday (Aug 22).

The findings were on par with separate statistics reported last week by Israel’s Maccabi healthcare provider, one of several organisations administering booster shots to try to curb the Delta coronavirus variant.

Breaking down statistics from Israel’s Gertner Institute and KI Institute, ministry officials said that among people aged 60 and over, the protection against infection provided from 10 days after a third dose was four times higher than after two doses.

A third jab for over 60-year-olds offered five to six times greater protection after 10 days with regard to serious illness and hospitalisation.

COMMENTS/IMPACT: First the Covid-19 preventing antibodies and now a significant reduced risk of infection from vaccines. The world gets closer to living with the pandemic as the new normal every day.