(CercleFinance.com) – A deluge of absolute records for a session of the ‘3 witches’ in solid gold… just like the previous one which crowned 7 consecutive weeks of increase with a series of annual records (but not yet absolute).
The S&P 500 smashes the previous record of 4,800 with a gain of 1.23% to 4,840 points… but this performance almost pales in comparison to the +2% of the Nasdaq-100 which explodes beyond 17,000, to 17,317 , in the wake of the ‘SOX’ (semiconductor index) which crosses its absolute record of 580Pts (from 12/27/2023) with a supersonic bang: +4Pts to 601, with the opening of a second ‘gap ‘ consecutive (for the 1st time since 1/11/2023, but these were cheap buybacks after a correction of -10%).
An upward spiral worthy of the ‘dot.com’ is taking off in some ‘hot issues’ like Nvidia (+4.2% to $595).
The stock has posted +20% since January 1, for a capitalization of nearly $1,500 billion, or 25 times the expected turnover by the end of 2024 (and 100 times profits).
Nvidia is now closely followed by AMD: +7.1% this Friday and +18.5% since January 1… and which ‘only’ pays 10 times its estimated turnover for 2024 and 40 times its profits.
Broadcom also rose by +5.9% and Applied Material by +4.8%… and Microsoft (+1.2% this Friday and +6% since January 1) consolidates its position as the world’s leading capitalization at 2,965 $ billion (for a PER of 33) ahead of Apple (+1.5% $2,962 billion) which is losing 0.5% this year.
And these records – surfing on the theme of ‘A.I.’ – are set in a completely extraordinary context – and certainly exceptional – since the week ends with a strong tension in rates across the Atlantic – across the entire curve – following the spectacular turnaround in expectations of monetary easing favored by investors since the end of November.
Difficult – even going back decades – to identify historical records coinciding with yield increases of 25Pts to 27Pts in 72 or 96H… and even less so when the horizon for a rate cut suddenly moves back several weeks.
The tension of the last 48 hours is reinforced by the jump in the Michigan confidence index of +9 points to 78.8 this month, the highest since July 2021, while economists predicted a much less pronounced increase around 70 .
The component of the survey measuring consumers’ judgment on the current situation reached 83.3 against 73.3 the previous month, while that measuring their expectations came to 75.9, after 67.4 in December.
How could the FED justify reducing its key rates after a figure so close to euphoria (the Michigan index is now only 7% of its historic high reached in 1978) and which reinforces a sharp increase in retail sales (+0.6% in December) and weekly unemployment at its lowest level in 50 years… synonymous with full employment and persistent pressure on wages.
The US ’10-year’ T-Bond deteriorated towards 4.1700% before falling towards 4.14%… which did not prevent it from achieving its worst weekly performance since mid-October 2023, the ‘2 years’ deteriorated by +2Pts to 4.37%, or 25Pts over the past week.
Finally, the ‘VIX’ fell by -6% and fell towards 13.30 whereas it had validated a warning signal 48 hours previously by rising towards 14.8, its worst score since the peak of last November 9 to 14 .
A ‘trap’ signal that catches the most cautious people off guard… and causes a sort of ‘FOMO’ (a wave of impulsive buybacks ‘at all costs’).
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