After a rough week, crude and tech stocks look to mount a comeback

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Good morning, and happy Friday.

Risk assets were roughed up on Thursday. This morning, the outlook is a bit brighter—that is in the U.S., anyhow. Europe and Asia are closing out the week on a downer note.

Oil yesterday bombed 7% lower, its worst one-day drop since October. Now, lower oil prices, in normal times, would be a boon for equities as it pushes down inflation risks. That’s something to watch as the energy markets suddenly look less stable. Crude though is on the rebound as I type.

Let’s spin the globe, and see what’s happening elsewhere.

Markets update


  • The major Asia indexes are mostly lower in afternoon trading, with the Nikkei down 1.4% in volatile trade.
  • Shares in Shanghai and Hong Kong were down about as much as a China-U.S. summit in Alaska gets off to a shaky start.
  • The global middle class had a rough year. COVID pushed millions more into poverty, erasing the gains of previous years, a new Pew study reports.


  • From Milan to London, the European bourses are awash in the red at the open with energy and financials hit particularly hard.
  • COVID deaths and infections are spiking across Europe, but reinforcements are on the way. The EU’s drug regulator on Thursday said the AstraZeneca COVID vaccine is safe to use, paving the way for the bloc to fully resume their vaccination campaigns.


  • The U.S. futures are a touch higher this morning in choppy trade. That’s after a brutal sell-off on Thursday, led lower by tech stocks.
  • Yields on Treasuries are subdued, trading below 1.70%.
  • Shares in Peloton fell 4.7% yesterday; it’s flat this morning. The company warned users yesterday to keep kids away from its high-end treadmills after an accident that killed a small child.
  • In a rare rebuke, shareholders opposed a compensation package for Starbucks CEO Kevin Johnson that included a one-time bonus of $1.86 million… Me, I’m loyal to my caffetiera of caffè mocha.


  • Gold is higher, but it’s not living up to its reputation as a safe-haven. It’s trading around $1,740.
  • The dollar is lower.
  • Crude is rebounding, with WTI trading just above $60/barrel.
  • Bitcoin is steady at $58,000. That’s after it pushed closer to 60K over night.


By the numbers


Last week at this time, tech shares were on the upswing. The Nasdaq had just surged 675 points over a few sessions, a move that changed the narrative from “correction” to “resurgence.” Alas, since then the tech-heavy Nasdaq has bombed lower by 7.5%, a loss of 1,059 points. Yesterday’s 409-point sell-off was brutal. Tech stocks are particularly sensitive to bond yields, we’re learning (the hard way). And, yesterday, when the yield on 10-year Treasuries hit a 14-month high, the Nasdaq crumbled.


A fiver doesn’t sound like much, unless, that is, you’re talking about crude oil future contracts. Brent is trading higher this morning at $64.41, but it’s down 7.5% in the past week on doubts over demand and a robust dollar. At one point yesterday, the U.S. benchmark WTI was faring even worse, down more than 10% off its highs of last week. All in all, it’s been the worst week for the crude market since October. And, sure enough, the S&P 500 Energy sector is feeling the pain. That too is down 7.5% over the past five trading sessions. Energy stocks still make up the best performing sector YTD, but the abrupt reversal of fortunes is giving oil bulls whiplash. Mind you, I haven’t seen any analysts revise down their year-end price target for crude. And nobody is fearing the larger re-opening trade is in jeopardy. Yes, new lockdown measures this week in places like Italy and France, not to mention Europe’s stuttering vaccine rollout, don’t instill a lot of confidence. But, then, the U.S. is on track to vaccinate half the eligible population by May.


Inflation is the kryptonite of the stock market. The Fed, for one, isn’t concerned. Federal Reserve Chairman Jerome Powell told us on Wednesday rising prices are a mere transitory phenomenon. “Transitory” is central-banker-speak for fleeting, impermanent, fugacious (fugace in Italian). Goldman Sachs pegs the year-end core inflation rate at 2% on the nose. It will hover around that level next year and the year after, Goldman says. As such, nobody is expecting a rates rise until the second half of 2023 at the earliest. Keep that in mind when you hear all this renewed chatter about taper fears.



Do we have any beekeepers in our Bull Sheet community?

Living in an apartment here in Rome, I don’t quite have the space for hives on our cramped terrace. Plus, the condominium rules forbid the breeding of pollinators, or so I’ve been told.

But I’m fascinated by beekeeping and beekeepers. If you keep bees, I have a lot of questions for you, starting with: which breed? Buckfast? The German Mellifera Mellifera? Here in Italy, the native bright yellow Ligustica is one of the more common varieties.

When the dog is playing in the park I sometimes venture into the tall grass to watch the bees at work, their thighs thick with pollen balls. Italians love their bees. Along the ancient Appian Way, the fields this time of year are full of brightly colored hives, always a distraction for me on my way out of town on my bicycle.

I learned just the basics of beekeeping a few years ago on assignment in Bavaria, and, yes, the bee bug has stuck with me.

So, if you put on a beekeeping suit every now and then, please drop me a line. I want to hear about it.


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

A dignified wage. America's minimum wage earners are most likely to be young and female. They're overwhelmingly in the restaurant business (think waitresses and cooks). And, they made more (in purchasing power terms) in the late 1960s than they do today. Here's the bare minimum you should know about America's minimum wage.

Ten-figure reprieve. The Department of Education yesterday announced that 72,000 student loan borrowers will have the entirety of their debt forgiven, a $1 billion lifeline to recent grads trying to make ends meet in a brutal jobs market...Which brings to mind this: A few years ago I wrote about America's youth precariat in a piece for the Sunday Boston Globe, a publication with a not-insignificant left-of-center reader base. I was genuinely surprised at how many readers emailed me to say I was out of touch in explaining why it's a good idea to give America's youth some kind of pass on their mounting debts.

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

Quiz time

Yesterday's sell-off was a brutal one. But there was a prominent green shoot among the blur of red. Which sector was it?

  • A) Healthcare
  • B) Utilities
  • C) Financials

The answer: C. The S&P Financials sector finished up an impressive 0.56% on Thursday.

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