FOMC minutes released this Wednesday, PCE figures and US bond yields to drive US equity markets this week

With the Election result and distortions now baked into the market the immediate focus is moving to the Economic news with at least one eye on bond yields as they respond to what Trump's policies could mean for inflation. The recent wholesale prices release showed that price rose 0.2% in October, annualised rate of 2.4%. This was in line with expectations and would appear consistent with a further interest rate cut this year. Important figures in this shortened Thanksgiving trading week include: Tuesday Consumer confidence and minutes from Fed's Nov FOMC meeting, Wednesday Q3 GDP, various Personal Consumption Expenditure (PCE) figures for October.

After a mixed start the market was strongly ahead last week. The VIX was down 2 at 15 on Friday, this seems too low considering the recent market swings. The main indexes on Friday were; DJIA +0.97%, S&P 500 +0.35% and Nasdaq +0.16% (Mag7 -0.12%). On an equal weighted basis (our measure) the overall market was +1.52% on Friday. Breadth of 71% (daily range of 22% to 71% over the last 10 days). Daily volumes of 9.4b (the average daily volume over the last year of 8b). 

Daily returns on Friday: Mag7 -0.12% (TSLA +3.8%, MSFT +1%, GOOGL -1.7%, NVDA -3.2%), large cap +0.76%, medium cap +1.34%, small cap +1.8% and micro cap +1.62%.

Week returns as follows - equal weight basis: Market +3.6%, Mag7 +0.93% (TSLA +10%, AAPL +2%, AMZN -2.7%, GOOGL -4.5%), large cap +3.1%, medium cap, +4.4%, small cap +4.2% and micro cap +3.2%. 

Our risk monitor remains in favour of the larger cap stock. Micro caps have underperformed the market by 0.9% over the two weeks - it has fallen from a peak of 1.6% a week ago.

Technology was the best performing sector again on Friday. The underlying driver of this performance is Blockchain and super computing including Quantum Computing. Fintech was +3.3% (Blockchain 4.4%), Computer Hardware +7.9% distorted by Quantum Computing, SMCI also continues to move up sharply, Semicon +2.7%. Healthcare was the second best performer on Friday bucking the underperformance seen since Trump won the election. Consumer Non-Cyclical was the third strongest performer with Personal & Household Products +2.8% (Black Friday effect?). Industrials continued to 'quietly' outperform with breadth of 78% on Friday, Aerospace & Defence +2.9%, General Dynamics GD and Lockheed Martin LMT continue to underperform. Consumer Cyclicals slightly underperformed the wider market but were still +1.4% on the day, Speciality Retailers +2.2% (Black Friday effect?), Discount Stores +2.1%, Recreational Products +2.3%. Renewable Fuels +2.9% and Renewable Energy Equipment +2.8% was the best performer in Energy. In Basic Materials Gold, Silver, Aluminum and Iron all underperformed but Lithium was the one area of strength at +2.3% on the days and now +6.5% on the week. Utilities underperformed the market, Natural Gas +2.3% (6.1% on the week) was the best performer.

A notable number of 52 week highs was seen in the following sectors: Consumer Cyclicals very strong (across there sector but Hotels and Media & Publishing very strong), Energy (Oil & Gas Equipment) , Financials, exceptionally high number, particularly Banking & Investment Services. Industrials was strong again (across the sector but Machinery, Tools, Heavy Vehicles was the strongest) and Technology very strong (Software & IT Services, Technology Equipment), Utilities (across the sector ex Water).

Notable high volumes in all sector: High levels in Basic Materials (Metals & Mining) Consumer Cyclicals (across the sector), Financials (across the sector), Healthcare (across the sector), Industrials (across the sector) and Technology saw a very high number (Software & IT Services, FinTech and Technology Equipment)