CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

As the markets bomb lower, this one sector continues to rally

March 5, 2021, 10:47 AM UTC

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.

Happy Friday, Bull Sheeters. Global markets and U.S. futures are sinking again this morning ahead of today’s big non-farm payrolls report.

The risk-off mood looms over markets despite a relative calm with bonds. Treasury yields are fairly stable today. That’s after 10-year Treasury yields spiked yesterday amid Fed Chairman Jerome Powell’s comments that it is the labor market that remains the central bank’s primary concern—that and inflation. In other words, everything else takes a backseat.

On cue, stocks look certain to fall again this week, led lower by tech shares. It’s not a sell-everything panic, mind you. Crude is soaring again. And that’s good news for energy shares. For a third straight day, energy is outperforming the wider markets.

Let’s see what’s moving markets.

Markets update


  • The major Asia indexes are awash in red in afternoon trading, with the Hang Seng down 0.5%.
  • China put forth a somewhat modest growth target of 6%-plus for 2021, below economists’ estimates. Investors aren’t quite sure what to make of the forecast. The Shanghai Composite has been up and down all day.


  • The European bourses were lower with the Stoxx Europe 600 off 0.6% at the start, before falling further.
  • 2021 has opened with a bang for London’s IPO market. Yesterday, it scored one of the most hotly anticipated new listings of the year—the Amazon-backed Deliveroo IPO.
  • Scotch whisky fans, raise a toast. The Biden administration yesterday suspended the hated tariffs on the famed drink, and there’s plenty of joy up North. The punitive duties date to the Trump trade war days of 2019.


  • The U.S. futures have been trading lower throughout the morning. That’s after all three major exchanges finished in the red again, sending the Nasdaq into negative territory for the year.
  • In a provocative broadside directed at America’s frackers, Saudi Prince Abdulaziz said yesterday the “drill, baby, drill” rallying cry “is gone forever.” That bold prediction came after OPEC+ surprised markets by agreeing not to hike output, a move that sent crude prices soaring.
  • All eyes are on today’s non-farm payrolls report, the first “full” report of the Biden presidency. The consensus estimate is for the report to show roughly 200,000 new jobs.


  • Gold is falling again, trading below $1,700.
  • The dollar continues to gain ground as equities falter.
  • Crude is flying, with Brent trading just around $68/barrel.
  • Bitcoin is off more than 5% at 11 a.m. Rome time, trading below $47,200.


By the numbers


I have bad news, tech bulls. The Nasdaq officially went into the red yesterday for 2021. Worse still, it’s fallen 1,452 points, or 10.2%, from its intraday Feb. 12 all-time high of 14,175. Yes, by that measure, it’s in correction territory. And as I type, Nasdaq futures are down nearly 72 points this morning. Big-cap tech stocks have taken the brunt of the latest market slump, as they are most vulnerable to rising bond yields. Wall Street pros have been warning for some time that tech shares would be the most vulnerable assets as the great rotational trade gathers steam. That said, I don’t recall any predicting we’d enter correction land in Q1.


Not everything is falling, mind you. The S&P 500 energy sector is up—wait for it—33.4% this year, the best performing equities asset class in 2021. Energy stocks live and die with the supply and demand of crude. And Brent and WTI futures contracts are both trading at 14-month highs this morning. Those prices will only go up as the global economy begins to reopen. In almost every way, the energy rally is the mirror-opposite of the tech slump. Ryan Detrick, Chief Market Strategist for LPL Financial, sees a silver lining in energy’s high-powered gains. “It suggests this isn’t a sell everything moment,” he wrote in an investors note yesterday.


Everything in the equities market seems to revolve around the ever steepening yield curve on 10-year Treasuries. It’s now up 64 basis points so far in 2021, a hike of 70% YTD, as investors dump long bonds on the expectation that the economy is ready to blast off—and bring with it inflation. As I type, the bond yield sits at a somewhat stable 1.55%. Spiking yields are the new “taper tantrum” headwind facing the equity markets. A reminder: the original taper tantrum, of 2013, was a short-lived affair. This one is playing out similarly with investors urging the Fed to step in and cool off the surge in yields. In remarks yesterday at the Wall Street Journal Jobs Summit, Fed Chairman Jerome Powell signaled the central bank will stay out of the fray for now, and that sent stocks tumbling yesterday afternoon. “The market was looking for some more reassurance and didn’t get it,” Krishna Guha at Evercore ISI told the WSJ.


Have a nice weekend, everyone. I’ll see you back here on Monday… But first, there’s more news below.

Bernhard Warner

As always, you can write to or reply to this email with suggestions and feedback.

Today's reads

SPAC-tacular Europe. SPACs are all the rage in the investing world—on both sides of the Atlantic. London and Amsterdam are vying to become the European capital of these blank-check listings. There's big money on the line.

King dollar. One of the more confounding developments of the markets slump is the rise of the almighty dollar. An overwhelming number of FX analysts predicted this would be a rough year for the greenback, but it has surprisingly climbed more than 2% since its January lows. A strong dollar would hurt the recovery story in emerging markets, and it would be a major tailwind for America's exporters. Ken Veksler, chief investment officer of Accumen Management in Amsterdam, tells the WSJ the strong dollar can be pegged to America's relative success in the vaccine rollout.

Stimulus contagion? Call it the butterfly effect, as applied to fiscal spending. In China, economists are worried a new $1.9 trillion round of stimulus in America could push up global prices, and lead to a mountain of debt. The scenario of imported inflation, they fear, would hurt a global recovery.

Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.

Market candy


This data point surprised me... Investors aren't quite ready to abandon their long-tech trade. In a Fortune-Civis Analytics survey, respondents said they see the most upside in technology (50%), real estate (29%), and financials (23%). What, no energy?... The survey findings point to a continued bullish mood despite the recent markets swoon.