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Bull Sheet

Global markets on autopilot as stocks climb, Bitcoin stumbles

August 31, 2021


Good morning, Bull Sheeters.

From Tokyo to Paris, stocks are pushing higher as we close out the final trading day of August. U.S. futures look strong too, with tech leading the way.

Elsewhere, crypto is slipping as investors pour into equities yet again.

In today’s essay, I look into a new bullish call for the S&P 500.

But first, let’s see what’s moving the markets today.

Markets update
Asia
• The major Asia indexes are climbing again with the Nikkei up 1.1% in afternoon trading.
• Shares in Chinese tech stocks Netease and Tencent were down as much as 3% in early trading, before rebounding, on the latest regulatory rumblings from Beijing. State media reports China wants to impose strict time limits for video game-playing minors of no more than three hours per week. 🎮
• In other news: two parents in Italy 👏👏👏 China’s Ministry of Video Games.

Europe
• The European bourses were adding to yesterday’s gains with the Stoxx Europe 600 up more than 0.2% in the first hour of trading. The benchmark is poised to finish August in the green, its seventh straight winning month. It hasn’t had such a streak since 2013.
• Lufthansa and Air France closed lower by 1.5% on Monday as Europe recommends a new rule for American tourists: no vaccine, no entry. The Stoxx Europe travel and leisure sector fell at the open on Tuesday.

U.S.
• U.S. futures continue to grind ahead. Yesterday, the S&P 500 Nasdaq cinched fresh all-time highs as tech stocks led the “momentum” rally. Tech futures look strong again this morning.
• Moderna’s COVID vaccine produces twice the antibodies of the Pfizer jab, a new study shows. Investors though are unimpressed. The shares are down slightly in pre-market trading.
• Shares in Robinhood tumbled nearly 7% yesterday (and are down in pre-market) after SEC Chairman Gary Gensler declared a full ban on order for payment flow is on the table. What’s order for payment flow? Here’s a great explainer.

Elsewhere
• Gold is up, trading around $1,820/ounce.
• The dollar is sliding again. Powell’s Jackson Hole speech has hit the greenback hard.
• Crude is flat with Brent trading around $72/barrel.
• Bitcoin is down, trading around $47,000.

***

S&P 5,000?
Number 53.

And today it looks as if we’re heading for Number 54.

I’m speaking of course about the rally in equities, one for the record books. The S&P 500 has now closed at an all-time high 53 times this year. It’s up more than 20% YTD, and, more impressively, has not experienced a single pullback of 5% the entire year.

That performance is dividing investing pros into two camps: those convinced we’re due for a sell-off (and even a correction), and those that see plenty more gains to come. To be clear, the bears have been predicting a correction for months, only to see the S&P gain an additional 10% since April.

With COVID cases spiking, inflation soaring and global supply chain woes bedeviling businesses and consumers, there are plenty of things to fret as we head into the final four months of the year (and beyond).

But stocks shouldn’t be one of them. That’s the message from Mark Haefele, chief investment officer at UBS. In an investor note this morning, he spells out the case for S&P 5,000 by the end of 2022.

I know what you bulls are thinking: you mean just a lousy 10% rally over the next 16 months? That’s it?

It’s not Cathie-Wood-bullish, but such a performance would equate to a two-year (2021-22) gain of 30%. A lot of us would have signed up for that in January.

Anyhow, Haefele gives three reasons for this bullish call: resurgent global growth, resurgent company earnings and a dovish Fed.

“We believe the backdrop for equities remains positive, and we advise investors to position for reopening and recovery. Our S&P 500 targets are 4,800 for June 2022 and 5,000 for end-2022. We advise investors to position in stocks that should benefit from strong economic growth,” he writes, adding that the firm’s favorite sectors are financial, energy and Japanese stocks.

***

Postscript
If you live in Italy, there’s a term you’ll hear a lot this time of year: rientro, as in the grand return to the city following the end of the sacred August holiday.

For us, the rientro is this evening. We’ll close up Fortune‘s Amandola news bureau, and head back to Rome. The school year beckons, as does shuttling the kids to gymnastics classes, dentist appointments and battling Roman traffic to get anywhere.

On cue, the weather is sublime. It’s one of those days you can see forever, clear down to the sea. The dog is chasing butterflies. The birds are chirping. And it’s just quiet and peaceful (except for Bloomberg TV squeaking on low volume on my iPhone.)

I’m already plotting a return trip. White truffle season—the big one—starts in one month. Scilla, our truffle pooch, has to earn her keep.

Alla prossima!, Amandola.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

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Quiz time

Gold is on a nice little run, up nearly 2% in the past three trading sessions. Still, it’s down for the year. Which of these commodities is the top performer for 2021, so far? Is it…

• A) Crude
• B) Coffee
• C) Natural gas
• D) Orange juice

The answer is: C, nat gas, up nearly 70% YTD.

 

Thanks for reading.

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