Morning Minutes

Choppy Markets Consider Liquidation and Infrastructure Developments



World markets are very mixed this morning as investors digest the implications of several significant developments over the weekend.

First off, press reports indicate that the selective selling which hammered some stocks late Friday including twin 25%+ plunges for US media companies ViacomCBS and Discovery were sparked by the margin call related liquidation of some positions held by a US hedge fund/family office called Archegos Capital Management. Two overseas banks who indicated exposure to Archegos, Credit Suisse and Nomura, both dropped more than 10% in overseas trading overnight.

It remains to be seen if this liquidation is a one-off development or a sign of a more widespread problem. Traditional defensive havens such as Gold, the VIX and the Japanese Yen are steady to down 0.5% this morning suggesting that there has not been a significant jump in fear so far. Overseas markets were mixed overnight led by gains of 0.7% for the Nikkei and 0.5% for the Dax, while the Hang Seng was flat and the FTSE is down 0.2%. US index futures are in the red this morning, sliding 0.2%-0.4% and giving back some of Friday’s gains that saw the S&P 500 reach a new all-time high.   

Infrastructure remains a hot topic this week with the Biden Administration preparing to announce a major infrastructure program. In Egypt, the container ship blocking the Suez Canal has been partially refloated but the logjam at a key choke point for global trade continues for now. Commodities are mixed this morning with WTI crude oil up 0.7% and copper down 0.4%.

It’s a short trading week with many markets closed on Good Friday. Wednesday is not only the last day of the month and quarter but also the fiscal year end for many companies in the investment industry and because of this, we could see rebalancing and repositioning driven trading over the next few days. US nonfarm payrolls are still scheduled to come out on Friday with significant results ahead of that including US ADP payrolls, Chicago PMI and Canada monthly GDP on Wednesday plus Manufacturing PMI reports from around the world on Thursday. Earnings reports of note this week include Blackberry, Lululemon and Carnival on Tuesday, plus Walgreens Boots on Wednesday.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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