5-Chart Friday (3/5/21)

By Charlie Bilello

05 Mar 2021

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5 charts from the past week that tell an interesting story in markets and investing…

1. The Price of Admission

The S&P 500 fell 5.7% from its high in mid February to its low this week, its first correction since last September. This was the 28th correction greater than 5% since the March 2009 low.

Every correction is assigned a “reason” in hindsight, and this one is no different. The rise in interest rates and fears of inflation are the most common that I’ve seen.

On that front, long-term Treasury yields continue to trend higher (10-Year up to 1.55% from 0.92% at the start of the year) and inflation expectation (5-year breakeven) hit their highest levels in over 12 years this week.

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2. Momentum Breakdown

The sell-off in high momentum stocks over the past few weeks was more than 3x larger than the broad market.

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This is the sharpest momentum downturn on a relative basis that we’ve seen in quite some time.

3. Tesla Investors Tested

Tesla, long a momentum leader and the most talked about stock of the last year, is under some selling pressure.

Its current drawdown: 38%, the largest since last March…

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Tesla remains the largest holding in the popular Ark Innovation ETF ($ARKK) which is experiencing a correction 6x larger than the broad market.

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3. SPAC Boom Continues

Another day, another billion raised in SPACs. We’re quickly closing in on the record total from last year – and it’s only March 5.

When will this trend start slowing down?

Only when investors demand wanes, which will only happen when SPACs are not viewed as a risk-free proposition.

We may be seeing some early signs of that, with a number of the most popular SPACs showing significant declines in recent weeks, with the SPAC ETF ($SPAK) down over 20%.

4. 28 Trillion and Counting

US National Debt crossed above $28 trillion for the first time, increasing $4.6 trillion over the last year. More debt is on the way with the $1.9 trillion stimulus bill getting closer to passage.

Moving higher with national debt is the US Money supply, which grew 25% in 2020, the largest annual increase in history by a wide margin.


5. Covid Downtrend Continues

Covid-19 hospitalizations in the US have now declined 51 days in a row.

The US has averaged 2.1 million vaccines shots per day over the last week, a new high. 16% of the population has now been given at least 1 dose and with the J&J vaccine rolling out this week, the pace should continue to increase…

And that’s it for this week. Thanks for reading.

Have a great weekend everyone!


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