Last week ended with a new flurry of records: the S&P500 (+0.77%) hit a new high at 4,128.8, the Dow Jones (+0.9% and +2% weekly) peaked at 33,800, the NYSE Composite at its zenith at 15,960, and the Dow Jones Global at 43,145.
The Nasdaq (+0.5% to 13,900 and +3.1% over the week) is back to within 1% of its highs and the Wall Street/GDP ratio has just exceeded 200%, at 200.1%, for the first time in the history of all markets of the planet. In addition, the 'VIX' associated with the S&P500 plunged by -8% to 18.4 over the week, which reflects the highest level of confidence since late February 2020.
Yesterday, Jerome Powell said the U.S. economy is at an "inflection point", with the Fed expecting that growth will accelerate in the next few months. However, he warned that lifting restrictions too quickly could lead to an increase in coronavirus cases and threaten recovery.
Some clues about the state of the economy will also come on Wednesday at the start of the earnings season, when first quarter results will be released by U.S. banks Goldman Sachs, JPMorgan and Wells Fargo.
Financial markets continue to be buoyed by the inevitable acceleration of economic growth, boosted by the lifting of health restrictions and a very favorable basis for comparison. This will be illustrated on Friday with China, which will publish the first estimate of its GDP for the first quarter. Economists are expecting an average 18.3% increase over the year. You may recall that China was hit by the coronavirus in the first quarter of 2020, which will make its figures all the more spectacular. For the rest of the world, it's mostly in Q2 that the comparative base will offer leverage. .
The world's major indices are showing average double-digit gains in 2021. It's a little more in Europe and a little less in the U.S. now, but Wall Street is catching up. The pace of equity market gains remains strong and should be driven by rising earnings. A major Swiss bank pointed out on Friday that we are now at a stage in the cycle where earnings should be a much more powerful driver than multiples. After the rush to cyclicals and the more recent and more discreet rush to defensive stocks, there are opportunities based on earnings growth in many sectors, the bank said.
While the unemployment rate peaked in 2020, CEO pay also spiked in the same Covid-19 pandemic year. According to a Wall Street Journal analysis in the U.S., the average compensation of the CEOs of the nation's 300 largest companies hit a record high at $13.7 million annually, a 7% increase over 2019. Indeed, this increase is primarily the result of rising equity markets as a large portion of senior executives receive compensation and/or performance bonuses in the form of stock.
Economic highlights of the day
British monthly GDP, the Banque de France business sentiment index and European retail sales for February are on the agenda. There will be no major indicator in the US.
The euro is back to flirting with USD 1.19. The ounce of gold is down to USD 1740. Oil is down slightly to USD 63.5 per barrel of Brent and USD 59.86 per barrel of WTI. The yield on the T-Bond comes in at 1.65% over 10 years. Bitcoin is trading on new highs, at USD 60,500.
*Chinese regulators on Saturday fined Alibaba $2.75 billion (2.31 billion euros) for violating anti-monopoly rules and abusing its market dominance, marking the largest antitrust fine ever imposed in the country. The group's chief executive said Monday that he did not expect a major impact of the penalty on its business. In pre-market trading, the stock gained 6.3%.
*Microsoft announced Monday that it has bought artificial intelligence and voice technology company Nuance Communications for $19.7 billion. Nuance Communications shares were up 23 percent in pre-market trading when trading was halted pending a statement announcing the deal.
* A meeting is scheduled Monday between White House officials and the heads of nearly two dozen industry executives to address the global chip shortage.
* Apple agreed to have one of its executives testify before a U.S. Senate committee on April 21 to answer charges of anti-competitive practices related to its app store.
* Regeneron will seek a green light from the U.S. Drug Administration for its COVID-19 antibody cocktail as a preventive treatment after a study showed it helped reduce the risk of symptomatic infection of the disease by 81%, the U.S. drugmaker said Monday. In pre-market trading, the stock is up more than 1%.
* Johnson & Johnson announced Monday that it has begun shipments of its single-dose Covid-19 vaccine to European Union countries.
* Uber - The U.S. ride-hailing giant gained 3% in pre-market trading after reporting an all-time record number of monthly gross bookings.
* Luminex, a diagnostic test manufacturer, gained more than 9% in premarket trading after announcing that it had been acquired by the Italian group DiaSorin for $1.8 billion.