September 28, 2021

Market Performance For The Prior Week

Source: YCharts
Disclaimer: Past performance is no guarantee of future performance

The Good News

Economic surprise index creeping back up 

And the leading economic index continues to be a positive signal

And earnings remain strong

The average investor is always shocked to hear just how much more profitable the S&P 500 is today versus 2019. Earnings are 36% higher. pic.twitter.com/nkeDcs6q0o

— David Schawel (@DavidSchawel) September 21, 2021

And consumers are historically financially healthy

The worst recession since World War II and the highest growth in net worth on record. https://t.co/aokyFbFz9b

— Morgan Housel (@morganhousel) September 23, 2021

The Bad News

Inflation concerns remain in the limelight

The Global Supply Chain is a &#$*ing Mess—in 4 JPM graphs

1. Dozens of containerships stacked up outside LA
2. Shipping rates to the moon
3. Global delivery times at 25-yr highs
4. Our surging demand for WFH and home improvements imports —> wild surge in eastbound freight rates pic.twitter.com/feeEzZKz7U

— Derek Thompson (@DKThomp) September 27, 2021

Even a normally cold winter in the Northern Hemisphere is expected to drive up natural gas prices further across much of the world. U.S. gas prices, while lower than Europe, are trading near the highest level since 2014. https://t.co/qpti07cX5Y via @economics @markets @BW pic.twitter.com/VcDLY63cQt

— Steve Matthews (@SteveMatthews12) September 27, 2021

And the debt ceiling conversation is heating up

NEW: JPMorgan Chase CEO Jamie Dimon tells Reuters that the nation's largest bank is preparing for a potential U.S. credit default as debt limit talks go down to the wire in Washington. pic.twitter.com/JqWNDLJlsF

— CNBC Now (@CNBCnow) September 28, 2021

Resulting in rising yields

U.S. yields are climbing again today to some of the highest levels since before the pandemic. Yields on 5-year notes just touched the highest since February 2020. pic.twitter.com/YNHgmiGt39

— Lisa Abramowicz (@lisaabramowicz1) September 27, 2021

The State Of The Market

The rise in yields has hurt tech stocks the most 

Yesterday was strongest performance for ⁦⁦@Bloomberg⁩ value factor relative to growth since early March 2021
[Past performance is no guarantee of future results] pic.twitter.com/bMkq0Teu3x

— Liz Ann Sonders (@LizAnnSonders) September 28, 2021

And volatility seems like it could be on the rise again 

Source: Bloomberg

And retail traders continue to play a role in this market

Which probably helps explain why equity flows have been all over the place 

U.S. stocks had their worst weekly outflow in more than three years, with traders pulling $28.6 billion from U.S. equity funds in the week through Sept. 22: BofA & EPFR Global data.

— Lisa Abramowicz (@lisaabramowicz1) September 24, 2021

"Clients were big net buyers of US equities last week… Buy-the-dip mentality underscores optimistic sentiment… Inflows were the fourth-largest in our data history since '08 (and the largest since Dec. as a % of S&P 500 mkt. cap)…” – BofA

— Sam Ro 📈 (@SamRo) September 28, 2021

Look at the flows in 2020 & 2021 compared to prior years..

And they are surely involved in this crazy options market  

These options stats…

9 of 10 most active call option trading days in history this yr.

39mil option contracts traded on avg day in 2021, ↑ 31% from 2020 & highest level since market inception in 1973.

Daily avg notional value of traded single-stock options > stocks.

via @WSJ pic.twitter.com/MRd7WBSm21

— Nate Geraci (@NateGeraci) September 27, 2021

'When individual investors buy call options, the Wall Street firms that sell options often hedge their positions by buying the shares, further contributing to rising markets. "It creates a circular kind of melt up. It’s a reinforcing loop."' https://t.co/a0Ot0Ux2jj pic.twitter.com/aijo48wvTr

— Jesse Felder (@jessefelder) September 26, 2021

And this has been happening while liquidity has been on the decline

Charts Of The Week

“History shows that US government shutdowns generally have not meaningfully impacted equity returns.” – GS pic.twitter.com/CBi9yggcnu

— Sam Ro 📈 (@SamRo) September 22, 2021

Chart of the week👇 ht @MacroAlf pic.twitter.com/EKHehEoxCU

— Michael A. Arouet (@MichaelAArouet) September 24, 2021

Speculative trade boom looks to be over in terms of 12m change … ⁦@GoldmanSachs⁩ indexes of non-profitable tech, most-shorted, and retail-favored stocks—along with newer IPOs—saw up to triple-digit % gains earlier this year; performance is still strong but well off boil pic.twitter.com/l6O4LFXP8q

— Liz Ann Sonders (@LizAnnSonders) September 27, 2021

Disclosure

Clear Rock Advisors, LLC is registered with the SEC as a registered investment advisor with offices in Texas. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by Clear Rock Advisors, LLC) or any investment-related or financial planning consulting services will be profitable, equal any corresponding indicated historical performance level(s), or prove successful. It remains the client’s responsibility to advise Clear Rock Advisors, LLC, in writing, if there are any changes in the client’s personal/financial situation or investment objectives for the purpose of reviewing, evaluating or revising Clear Rock Advisors, LLC’s  previous recommendations and/or services, or if the client would like to impose, add to, or modify any reasonable restrictions to Clear Rock Advisors, LLC’s services. A copy of Clear Rock Advisors, LLC’s current written disclosure statement discussing its advisory services and fees are available upon request.