View from 5th Avenue

The View at Two – 16th April, 2021

Value Vibes…The global recovery has accelerated this week with the MSCI All Country World Index pushing to fresh record highs today. Credit goes to a multitude of positive economic figures out of the US this week, as well as data from Beijing showing China’s economy soared in Q1. Not to mention, an equally optimistic Europe, which closed today with 7 weeks of advances. In the US, stimulus money, Covid-19 vaccinations and business re-openings have spurred a spring surge in consumer spending, a sharp pullback in layoffs and a bounceback in factory output. Further, a solid start to the corporate earnings season is helping support the recovery. That said, Morgan Stanley (-3.4%) and Bank of New York Mellon (-4.2%) are actually not contributing to the Bank sector’s overall move higher today, however. The former saw a record quarter that was overshadowed by a $1bn Archegos hit (#notalone). And the latter reported Q1 profit and revenues down from a year ago. That said,  Goldman (+1%), BAML (+0.8%) and JPM (+0.6%), as well as PNC Financial (+1.7%) after earnings today, are carrying the team just fine. Elsewhere, Materials and Consumer Discretionary are also outperforming, while Energy and Tech lag. What happens next will depend mostly on continued recovery signals, vaccine progress, yield moves and Fed speak. Though it will be interesting to watch the red flags that continued to be raised in regards to the market’s ascent. David Einhorn said yesterday that markets are fractured and could be broken completely. “Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious.”

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