What I think I learned last week #16
The S&P 500 broke the 2600 mark for the first time. The S&P 500 took 49 days to climb the 100 points from 2500 to 2600, the second fastest 100 point climb in history. The fastest was the 35 days it took to move from 1000 to 1100 in 1998.
The S&P 500 has had 55 record closes this year, the most in more than 20 years. The Nasdaq has posted 69 record closes this year, while the Dow industrials average has had 60 records.
The S&P 500 Retail index, of which Amazon is a leading member, hit all-time highs on Black Friday. Note to French readers: Black Friday is the day after Thanksgiving, an American holiday. Black Friday, because it is a Friday after a holiday Thursday, is often used as what you call a “bridge.” So people have the day off from work and they can go shopping, which signals the start of the holiday season. Black Friday only occurs on Friday. So France, please stop advertising your Black Friday sales that occur from Thursday to Monday.
The US yield curve is at its flattest point since November 2007. I think we all remember what happened after that.
Chinese stocks last week had their worst one-day decline in 17 months as the 10-year Chinese government bond rose above the 4% level. Chinese debt, in my opinion, is the biggest risk factor for global markets. Even though I don’t invest in Chinese debt, it is necessary to watch it.
An interesting statistic: over the last ten years, the Shanghai composite has dropped by at least 2% six times on Thanksgiving Thursday and Black Friday.
This week OPEC meets again and the expectations are that the ministers will agree to extend their supply cuts in an effort to bring the oil market back to balance next year.
Global dividends grew at the fastest pace in three years in the third quarter of 2017. The growth rate of global dividends expanded to 14.5 % to $328 billion in the quarter ending September. This was a record for third quarter dividend growth and the strongest quarterly performance since 2014.
US Federal Reserve minutes strongly indicate that the Fed will hike interest rates in December. This has been priced in for a long time in the markets, so it will surprise exactly no one.
Colombia’s central bank in a surprise move, cut interest rates by a quarter of a point to 4.25% as inflation remains contained.
Shifting gears, according to Bloomberg, over the past 12 months Tesla has been burning money at a rate of about $8,000 a minute (or $480,000 an hour). At this pace, the company is on track to run out of cash by early August.
Former BofA trader fined £60,000 for ‘algo baiting’. He entered bids for Dutch state loans that pushed up their price. Then, when other algorithmic trades followed him in response and raised their bids, he sold to them and cancelled his quote. Personally, I think the algorithmic traders are the market abuse. Humans beating computers is something society ought to encourage. There will come a time when we won’t be able to beat them.
And that’s what I think I learned last week….