Happy Friday, Bull Sheeters. There’s plenty of red on the screen this morning. That’s despite a flurry of headlines which the markets of yesteryear would’ve swooned over: President-elect Joe Biden plans to ask Congress for a new $1.9 trillion stimulus spending plan and Fed Chief Jerome Powell wants you to know lower-for-longer is here to stay.
Below, in the weekly “By the Numbers” section, I get into the big winners and losers of the 2021 markets. One is a an old-school auto stock that’s crushing Tesla shares.
Let’s see what’s moving markets.
One major plot line of the 2021 markets is the rally in small-caps. The Russell 2000 is up 9.1% YTD. (The S&P Small Cap 600 is doing even better; it’s up 10.1% in that same period.) At the same time, the blue chip Dow Jones Industrial Average is down 1.5% and the large-cap Nasdaq 100 is flat, up 0.1%. Two major market forces—the vaccine rollout and further stimulus measures—position small caps for further gains, analysts say. Add it all up, and small caps are one to watch at the start of 2021.
You may recall how, in the frothy market days of the late ’90s, inserting the word “e-commerce” in a corporate press release would send shares of even the most pedestrian companies soaring. The equivalent to that today in the automotive world is to talk up your EV ambitions. That gets me to General Motors, which is up 46.6% over the past 12 months, hitting a series of fresh all-time highs along the way. (Who saw that coming this time last year?) Earlier this week GM presented its electric future at CES, attracting even more GM fanboys. The automaker’s shares are up nearly 19% over the past five trading sessions. During the same period, Tesla shares are down 1.3%.
Yesterday, we got another gut-punch of a reminder that the U.S. labor market is far from turning a corner. Unemployment claims jumped sharply last week with the seasonally adjusted tally hitting 965,000, far above economists’ estimates. The problem is that the labor market is broadly weaker, with declines in 36 states, showing that a larger economic decline is under way. The much-watched number of recipients on continued unemployment benefits has ticked up, to 5.271 million. Investors continue to shrug off labor data, but economists aren’t. “The stock market is not the economy—as was often pointed out throughout 2020—however, even the largest companies in the stock market rely on a stronger economy in order to continue to grow revenues,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in an investor note yesterday.
Have a nice weekend, everyone. A reminder: the markets are closed on Monday in observance of the Martin Luther King holiday. As such, Bull Sheet will be off until Tuesday… Until then, there’s more news below.
Bernhard Warner@BernhardWarner[email protected]
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The markets may be faltering, but these surprise stocks are taking off The British Journal Editors and Wire Services/ Fortune.