Nice month for the beaten-down sectors!
Mega Russell 2000 outperformance tends to come at moments of high volatility, sector rotation, and uncertainty. And it certainly has not disappointed post-vaccine.
Meanwhile, the energy sector has gone fully mad crazy this year, rising, or falling 30% or more in 3 out of 11 months this year.
Now that oil is on the ups which is the clearest signpost the street thinks a global economic heal is on the way, I have turned bearish on the U.S. Dollar (USD) for a one or two-week horizon.
The supply/demand situation is about to turn dramatically in favor of stronger currencies and a weaker USD.
Still, it might be a good time to remind everyone that something that goes up and down 30% in a repetitive fashion is not necessarily the best asset to chase higher.
Anyway, there are likely a few more upside dollars left in the oil market's tank before this rally fizzles.
Currency Markets
For context, the Bloomberg Dollar Spot Index (BBDXY) dropped 16.5% off the highs in 2009 alone, while the dollar is only 12% off the highs this year despite an arguably worse outlook.
The surprisingly high efficacy of vaccines brings forward the timing of the full global recovery and, with it, equity inflows to the rest of the world.
Also, the twin deficits have historically led to dollar declines, and the combination of a Yellen Treasury/inflation-targeting Powell reinforces the dollar downtrend.
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Telah diedit 26 Nov 2020, 16:08
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