Stocks set to hit new all-time highs as investors shake off the Delta blues

Good morning, Bull Sheeters.

Delta, sh-melta. Monday’s sell-off seems like eons ago. For a second straight day, stocks are climbing in Europe, and that risk-on mood, for the moment, is pushing U.S. futures higher. In fact, the S&P 500 looks poised to open at a new all-time high.

One stand-out today is travel stocks, which are doing well thanks to decent corporate results. Crypto and meme stocks, too, are gaining.

In today’s essay we dig into the latest bullish year-end call for stocks.

But first, let’s see what’s moving the markets.

Markets update

Asia

• The major Asia indexes are mixed in afternoon trading with the Hang Seng, the worst of the bunch, down nearly 0.5%.
• BHP Group wants out of fossil fuels pronto. According to Bloomberg, the mining giant is exploring the sale of its profitable oil and gas business, hoping to fetch $15 billion for it.
• Which brings us to…the summer of extreme weather continues. Record rainfalls slammed China’s Henan province, the world’s biggest production base for the iPhone and a big production factory for Nissan. The latter had to close temporarily.

Europe

• The European bourses were a lovely shade of green out of the gates with the Stoxx Europe 600 up 1.1% in early trading. Autos were an early exception, before rebounding.
• Shares in Volkswagen were off 0.4% at the open before climbing into positive territory after the German auto giant reported weak EV sales in the crucial China market. It’s trailing rival Tesla badly in that part of the world.
• Staying with German carmakers… Daimler this morning lowered its sales outlook, another victim of the global chips shortage. Shares were down 0.6% in early trading, but they too rallied.

U.S.

• U.S. futures have been ticking higher throughout the morning. That’s after the S&P 500 notched its biggest rally since March on Tuesday. Small-caps did even better. As Deutsche Bank notes, the benchmark has now bounced back impressively the last three times it’s sunk in the previous session.
• Shares in Netflix were down 0.4% in pre-market trading after the streaming giant reported lackluster subscriber growth, but confirmed it’s getting into video games.
• It took not quite 11 minutes for Jeff Bezos—where did he get that cowboy hat, by the way?—and crew to make 🚀-travel history. It took about that long for rival Virgin Galactic’s stock price to come crashing to Earth at the opening bell yesterday.

Elsewhere

• Gold is down, trading around $1,800/ounce.
• The dollar continues to gain on global currencies. If only Americans could freely travel the world to profit from this newfound spending power.
• Crude is up with Brent trading above $70/barrel.
• Bitcoin leapt overnight, to once again surpass $30,000. Still, bearish calls are getting louder. Some big names believe it’s headed for another big fall.

***

Upgrade time

On Monday, it seemed as if the sky was falling. Today, it’s all blue skies and birds chirping.

That change in the breeze may have a little bit to do with Dubravko Lakos-Bujas. He’s JP Morgan’s U.S. equities chief, and he surprised the markets yesterday with a bullish year-end call for stocks, predicting that the S&P 500 would finish 2021 at 4,600.

You may recall that Goldman earlier this month decided to stick with its 4,300 year-end call, essentially saying the markets will be flat the rest of the year.

Pffft to that, says JP Morgan.

Instead, the bank is calculating a further 6.5% of upside this year. If that were to hold true—subjunctive alert!—the benchmark would finish the year up an impressive 23% for the year.

(I’m a big fan of the subjunctive tense. If I were a foot taller, I would have become a pro basketball player. If I were a more canny investor, I would have gone all in on Amazon in the 1990s. With the subjunctive, you can dare to dream—or, change the past, present and future in your head, which is helpful after days like Monday.)

Why does Lakos-Bujas have us all dreaming about further gains to come? For starters, he’s not buying the peak-growth fears or the Delta variant threat that I wrote about yesterday. If Lakos-Bujas were a devoted Bull Sheet reader… oh, never mind.

He’s also banking on big corporate earnings for the rest of the year as the economy is only just beginning to fully open up. “Our research suggests the recovery is still in early-cycle and gradually transitioning toward mid-cycle,” his team writes.

The great reopening, they continue “is not an event, but rather a process, which in our opinion is still not priced-in, and especially not now given recent market moves.” 

That may, in fact, be a jab at Monday’s sell off. If only there were no Mondays…

***

Have a nice day, everyone. I’ll see you here tomorrow… Until then, there’s more news below.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

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

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