Daily Charts - Another Down Week
Most of big tech reported last week, most exceeded expectations, Google was the outlier. Positive earnings didn’t stop markets from continuing to sell off. Markets are still worried about escalating conflict in the Middle East. US regional banks are approaching March lows with the recent move in long end of the Treasury curve. International markets outperformed last week. The energy sector gave back all of the gains over the past month. Utilities were the top performing sector.
10Y yields fell 8 bps in the US and 10 bps in Canada providing some relief to fixed income markets. The Bank of Canada held the policy rate flat, CAD sold off 1.1% vs USD. Crypto continues to soar and Gold broke through $2000/oz.
This is the 4th worst S&P 500 correction since the end of 2021.
Excluding the Magnificent 7, the other 493 stocks are now down on the year.
The limited stock market breadth has meant we’ve seen the largest outperformance of the market cap weighted index over the equally weighted index in the past 20 years.
Elevated rates have investors interested in bonds again. If rates fall, bonds have convexity to offer.
Money no longer being free means, there is less cash available for buybacks; a driver of stock market returns over the past decade. Excess cash is now required to service debt.
Elevated rates have led to less corporate borrowing.
In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000.
Government workers are driving wage inflation. US private worker wage growth has slowed, rising just 3.9% YoY, the lowest in 2.5 years. US Government wage growth is 7.8%, just shy of a record high!
It took less than 15 years since the launch of the iPhone for half the world to have a smartphone.
2022 saw the end of 30 years of relatively limited global conflict.
As emerging markets continue to develop they are going to consume more energy. Where will this energy come from?
The amount of land and resources for nuclear power production vs wind and solar is shocking. Will society once again embrace nuclear energy? I think we need to.
