Equity markets continued their recent rebound last week with the S&P 500 Index now up 15% in 2023 and the tech-heavy NASDAQ index up 32% after having its best day on Friday since May. Additionally, investors have been positioning themselves for a year-end rally as hedge fund and money manager shorts against the S&P 500 are at their lowest levels since March. (Source: The Wall Street Journal)
The optimism in equity markets was not shared in the bond market last week as bond prices reversed from the massive rally two weeks ago. Yields on two-year Treasuries climbed back above 5% on comments from Jerome Powell and the Federal Reserve that current interest rates may not be high enough to drive inflation down to their 2% target level. The Fed's interest rate policy continues to be a key driver in bond markets, and their mixed messaging as they reach an inflection point in their fight against inflation is fueling elevated bond market volatility relative to longer-term levels. (Source: CNBC)
This week's focus will be on inflation as the October Consumer Price Index (CPI) report is released on Tuesday followed by President Biden and Chinese President Xi Jinping meeting in California on Wednesday. On the earnings front, major retailers will be the focus this week with Home Depot (HD), Target (TGT), and Walmart (WMT).
CRYPTO RESURGENCE - Cryptocurrencies have been surging in recent weeks, with Bitcoin eclipsing $38,000 last week and up over 120% in 2023. The recent spike in cryptocurrency prices stems from the anticipated approval of a Bitcoin spot exchange-traded fund (ETF). Additionally, Blackrock began the process to file an Ethereum spot ETF, the second largest cryptocurrency, fueling the recent risk-on appetite seen in crypto markets. (Source: MarketWatch)
TRILLION DOLLAR CREDIT - Consumer credit card balances surpassed $1 trillion collectively in the U.S., an increase of $154 billion year over year. Credit card delinquency rates are also ticking up, especially for individuals between the ages of 30 to 39 who are burdened with high levels of student loan debt. (source: CNBC)
GIANT TECH - Apple and Microsoft, the largest two companies in the world, now make up 14.7% of the S&P 500 Index, the largest combined market share of any two companies in modern history. The last time the largest two companies combined for over 10% market share of the S&P 500 was 1980 when IBM and AT&T made up 10.9%. (Source: CNBC)
EXPENSIVE FIRING - Texas A&M Coach Jimbo Fisher was fired over the weekend after signing a 10-year, fully guaranteed contract in 2017 and 10-year extension in September 2021. The move will cost Texas A&M over $77 million to buyout the remainder of Fisher's contract, more than three times the largest previous buyout. (Source: The Athletic)
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