A Snapshot of the Week Ended February 5, 2021:
The market remunerated the speculators who believed that the precipitous fall in stock prices caused by the raiding frenzy in misfit stocks was an unsustainable event and just too crazy to last. Michael Harnett called the idiosyncratic episode a “tempest in a teapot”. The S&P 500 regained previous week’s loss and registered a whopping weekly gain of 4.7%, as strong earnings underpinned the market. Meanwhile, the economic prints were either on side with expectations or much better than consensus. The Atlanta Fed’s GDPNow model has a new Q1 growth estimate of 6.0%, up from 5.2% on January 29. Interestingly, the plunge in the VIX, a reliable indicator of forthcoming volatility, from 33.2 to 20.87, is a clear sign of optimism. The enthusiasm of the market makes sense. Why?
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By Hubert Marleau
By Hubert Marleau