BentinPartner Weekly
Dear Reader,
Please find below our latest Weekly Trend Report.
Have a nice start of the week.
Marc Bentin,
Bentinpartner GmbH
After closing at a record high on Wednesday, US stocks caved in with the S&P500 dropping 2% in the two days of the week, suffering its worst session of the year on Friday, on the combined effects of US President D. Trump calling V. Zelinski a “dictator”, building evidence of a fading economic backdrop as consumers started to worry about tariffs and as Friday’s option expiration was rendered more treacherous by some coronavirus related concerns which finished sentiment for the week.
On Friday, while US February's preliminary Manufacturing came at 51.6 (highest since June 2024, up from 51.2 in Jan and better than the 51.4 exp), US Services PMI crashed to 49.7 (into contraction for the first time since Jan 2023), well below its 53.0 expectation.
The Point72 Asset Management founder and billionaire Steve Cohen also struck a bearish tone on Friday when asked about his outlook, saying “US growth is likely to slow in the second half of the year as tariffs, tighter immigration laws and government cost-cutting efforts led by Elon Musk, weigh on the economy”. “I’m actually pretty negative for the first time in a while” Cohen said. “It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction.”
Sector-wise, US Financials saw a fair amount of de-risking last week while healthcare outperformed, benefitting from some momentum unwind on Thursday and Friday, that sent investors back into the more defensive heath care sector, especially as it was accompanied by a fresh coronavirus scare that led to a 5% pop in (depressed) Moderna shares.
Only the Chinese markets offered some place to generate return on the long side last week, and in particular China Tech, following the strong publication of Alibaba on Thursday and the rehabilitation of its founder J. Ma after he was seen shaking hands with Premier Xi. More positive news came from Chinese state-backed developers starting to buy land at a premium again after the government eased limits on home prices to revive a slumping market that’s been a drag on the economy for the past four years.
US President D. Trump labelling V. Zelenskiy a “dictator,” and calling for Ukraine to hold elections (so far Ukrainian legislation prohibits the country from holding elections under martial law) was evidence that ties between Kyiv and the US soured. The Ukrainian leader said he was ready to step down if it were to guarantee peace to his country.
Prior to that, US Vice President JD Vance’s speech at the Munich security conference and shortly followed by his Paris AI conference address served as a cold shower and as a warning to Europe’s against its persistent war mongering efforts in Ukraine and inclination to curtail free speech and burden innovation with excessive bureaucracy.
Over the past week, the US held direct talks with Russia above the head and at the expense of European allies, signaling that it was revoking its support and funding for the war, whilst leaving the door open for Europe to continue funding that war on its own. The US also explicitly requested compensation for its previous financial support (estimated around USD200bn) with rare earth and other raw materials. The US also confirmed that an accession of Ukraine to NATO was not going to be part of any peace deal with Ukraine.
This came as a shock to Europeans and French President Macron expeditiously organized a meeting in Paris with those not associated to peace talks, in an effort to retake the initiative …and safe face, seemingly ready to consider the war in Ukraine as exceptional enough to lift fiscal safeguards.
E. Macron will be meeting President Trump today and already shared with Utubers the message he will convey to D. Trump. “Do not be afraid of V. Putin…This is not like you…”. The method and the nature of the message left some disconcerted.
On the bond side, US treasuries rallied 4bps while European bonds dropped by an equivalent amount as the perspective of Europe having to pick the tab of the war in Ukraine on its own took its toll.
Currency-wise, JPY rallied while the USD wobbled, ending the week lower across the board.
Gold briefly touched a fresh all-time high on Wednesday before dropping slightly on profit taking, easing on the lease rate of Gold and Silver and following the global deleveraging seen on Thursday and Friday but is indicated higher again this morning (USD2943) in fairly volatile trading (caused in part by dollar weakness) while bitcoin continued to trade with a soft tone (around 95’000).
Over the past week, the S&P500 dropped -1,6% (2,4% YTD) while the Nasdaq100 dropped -1,8% (2,9% YTD). The US small cap index sold off by -3,7% (-1,4% YTD, Z-score -3,4). AAPL gained 1,7% (-1,9%).
The Equally Weighed SP500 dropped -0,8% (2,6% YTD), outperforming the S&P500 by 0,8%. The median SP500 YTD return closed the week at 2,3%.
Cboe Volatility Index rallied 20,6% (5,0% YTD) to 18,21.
The Eurostoxx50 dropped -0,5% (11,8%), outperforming the S&P500 by 1,2%.
Diversified EM equities (VWO) gained 1,8% (5,4%), outperforming the S&P500 by 3,4%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies dropped -0,4% (-1,2%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,3% (1,6%).
10Y US Treasuries rallied -4bps (-14bps) to 4,43%. 10Y Bunds climbed 4bps (10bps) to 2,47%. 10Y Italian BTPs climbed 3bps (3bps) to 3,55%, outperforming Bunds by -1bps.
US High Yield (HY) Average Spread over Treasuries climbed 11bps (-16bps, Z-score 2,9) to 2,71%. US Investment Grade Average OAS climbed 1bps (0bps) to 0,87%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 0bps (-8bps) to 0,56%.
Gold gained 1,9% (11,9%) while Silver gained 1,1% (12,3%). Major Gold Mines (GDX) sold off by -4,0% (20,3%).
Goldman Sachs Commodity Index gained 1,0% (6,0%). WTI Crude dropped -1,2% (-1,8%).
Overnight in Asia…
S&P future +29 points; Hong Kong +0.4%; Nikkei +0.3%; China +0.1%
Friedrich Merz, Germany's conservative opposition leader, won Sunday's German federal election and will form a coalition government. Merz's CDU/CSU bloc won 28.8% of the votes, followed by the far-right Alternative for Germany with 20.2%, and Chancellor Olaf Scholz's Social Democrats with 16.2%. Merz aims to form a government within the next two months, with potential coalition partners being the SPD but likely not the Greens which stand as losers of the elections. EUR opens stronger this morning, up 0.6% to $1.0525. Germany's election outcome is expected to lead to increased spending (in defense and infrastructure) and a pivot away from constrained fiscal policy, Bloomberg wrote. Despite its gains, the AfD is unlikely to form a government, as other parties have ruled out a coalition with the nationalist party
The US will propose a UN resolution today that will "chart the path to peace". As of Friday, the US draft didn't condemn Russia for the invasion and dropped references to Ukrainian sovereignty and territorial integrity.
Russian President V. Putin opened the door to Western companies’ return to the Russian market, but only after sanctions are lifted. Last week, European leaders were also blindsided by the US delegation led by Secretary of State M. Rubio warming up to the idea of restarting business relations with Russia. He said there was an opportunity to “unlock a historic US-Russia economic alliance” if a deal could be struck. Going against that tide, Europe was said to be preparing a 17th train of economic sanctions against Russia.
Several US government agencies have advised their employees to ignore a demand from Elon Musk's government efficiency office to justify their jobs or face dismissal, Bloomberg reported.
To learn more about why and how to invest in the trend-following investment factor, check our dedicated web page.
If you like our Weekly, you will love our Daily!
Consider a subscription today. Discounts may apply!
To learn more about us and how we can assist you, check our website
Important Disclaimer
© Copyright by BentinPartner LLC. This communication is provided for information purposes only and for the recipient's sole use. Please do not forward it without prior authorization. It is not intended as a recommendation, an offer, or solicitation for the purchase or sale of any security or underlying asset referenced herein or investment advice. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situation, investment horizon, and particular needs. This report does not include information tailored to any particular investor. It has been prepared without any regard to the specific investment objectives, financial situation, or particular needs of any person who receives this report. Accordingly, the opinions discussed in this report may not be suitable for all investors. You should not consider any of the content in this report as legal, tax, or financial advice. The data and analysis contained herein are provided "as is" and without warranty of any kind. BentinPartner LLC, its employees, or any third party shall not have any liability for any loss sustained by anyone who has relied on the information contained in any publication published by BentinPartner LLC. The content and views expressed in this report represent the opinions of Marc Bentin and should not be construed as a guarantee of performance with respect to any referenced sector. We remind you that past performance is not necessarily indicative of future results. Although BentinPartner LLC believes the information and content included in this report have been obtained from sources considered reliable, no representation or warranty, express or implied, is provided in relation to the accuracy, completeness, or reliability of such information. This Report is also not intended to be a complete statement or summary of the industries, markets, or developments referred to in the Report.
Comments