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Good morning, Bull Sheeters.
Pfizer’s “full approval” was a shot in the arm for stocks yesterday. And that sentiment is carrying over today to Asia and Europe. U.S. futures are gaining again as the S&P 500 looks to extend its winning streak to four-straight.
It’s only Tuesday, but so far these market-moves looks to be the polar opposite of what we were seeing last week: the dollar is weak, while commodities and tech stocks are rebounding. That’s probably because investors are betting there won’t be any meaningful update from Jerome Powell on tapering to come out of the Jackson Hole confab later this week. Reminder: that could change.
One big factor that’s unchanged from last week: volume is really light. Not many of you are participating in this rally, it appears.
Meanwhile, crypto is slipping amid the equities bounce-back.
Let’s see what’s moving the markets today.
Markets update
Asia
- The major Asia indexes are jumping with the Hang Seng up nearly 2% in afternoon trading.
- Shares in JD.com soared 14% and Tencent was up 7.8% on Tuesday as investors—including über bull Cathie Wood—poured back into battered Chinese tech stocks.
- COVID is surging in Malaysia, and that bodes poorly for those of you looking to buy a new car. Why’s that? The country has become something of a player in chips production, and new COVID infections, it’s feared, could add to the global semiconductor shortage.
Europe
- The European bourses were adding to yesterday’s gains with the Stoxx Europe 600 up nearly 0.4% in the opening minutes. At the start, tech, basic resources and travel and leisure led the way higher.
- Shares in British supermarket chain Sainsbury’s have jumped more than 15% over the past two trading sessions on renewed speculation it’s a takeover target of U.S. private equity firm Apollo Global Management.
- Germany Inc. is bouncing back. Q2 GDP in Europe’s biggest economy rose more than expected; the euro barely budged on the news.
U.S.
- U.S. futures continue to grind ahead. Yesterday, the Nasdaq surged to an all-time high as tech stocks led a broad-based rally. Tech futures look strong again this morning.
- Pfizer jumped 2.5% yesterday on news the drugmaker and its partner BioNTech secured full approval from the FDA, a first, for their COVID-19 vaccine. That’s a potentially big deal for employers as it would appear to make vaccine mandates easier to enforce in the workplace.
- Spoiler: from Bank of America to Microsoft to Walmart, the list of major companies already mandating vaccines for some or all of its workers is getting longer and longer.
Elsewhere
- Gold is flat, but crept above $1,800/ounce overnight.
- King dollar has been the story of the summer in FX. It’s down ahead of the Jackson Hole meeting.
- Crude is up with Brent trading below $70/barrel.
- Bitcoin is off 1.2%, trading below $50,000.
***
Follow the (green) money
Before I get to today’s essay, I want to thank the Bull Sheet readers who’ve shared with me, via email, how they feel about their portfolios as we come to the final four months of the year. I’ve received some great responses, which I’ll share here on Friday. If you’re feeling particularly bullish, or have some nagging doubts, please let me know. I want to hear from you!
Now, let’s talk mutual funds.
According to Goldman Sachs, investors have parked $664 billion in new money into global equity funds (including ETFs) so far this year, a record for global inflows. We’ve been hearing all year that there are record amounts of cash out there just waiting to be invested. Well, apparently, it is being invested.
Where, you ask?
The big winner so far is ESGs. (Don’t groan. I get it. They are not as sexy as growth stocks, but ESG-funds aren’t that dull of a topic.)
“Global assets in ESG-focused funds,” Goldman’s portfolio strategy research team writes, “have doubled during the last 12 months to $1.6 trillion, aided by $314 billion of inflows.”
It gets interesting after that. Turns out there’s a big global divide in ESG, and that the U.S. has become a big laggard market in one of the fastest growing sectors of the investment world. Goldman finds that American investors are putting a far smaller portion of their money (equivalent to a puny 3% of their assets under management; see light-blue line) into ESG-geared funds than their global peers.
Goldman calculates that U.S.-based investors would need to invest a further $922 billion into ESG equity assets to reach the same levels of ESG investments seen in the rest of the world.
But before you do so, consider this: ESG hasn’t been a great performer this year. In fact, less than one-third of ESG-focused funds (32%) are outperforming the S&P 500 so far year-to-date. Here’s where it ranks:
At 17% (light blue line) that’s below the S&P 500, YTD.
***
Postscript
Time to play word-of-the-day. Today’s entry: Transhumance. It comes from the Italian transumanza.
It’s an oooooold concept, dating back about as long as we humans have been domesticating animals. As any Brokeback Mountain fan will recall, ranchers and shepherds need to move the livestock from the lowlands in the winter to the higher-up pasteurs in the hot summer in the search for fresh grass. There’s a single word for that twice-annual movement: transhumance.
Full disclosure: growing up in the New Jersey suburbs, I’d never heard of this word until I’d moved here (and only learned it from my kids’ homework lesson.)
Anyhow, it’s transumanza season here in the hills of Monti Sibillini. That means the shepherds (and their sheep and dogs) have reached the end of the line, up here in our little hilltop hamlet. When the rains came in yesterday evening, the dogs rounded up the sheep and pushed them south across the valley. Such moves create oddball traffic jams here as hundreds of sheep cram onto the road at once, and hurry forward as fast as their hooves will move them. (If you’re stuck behind them in a car, or bike, just be patient.)
The whole scene kinda reminds me of a Monday morning at Times Square station as a mass of humanity piles out of the N/R—are they still nicknamed the “never” and the “rarely”, or have they become reliable in recent years?—and 1/2/3 subway cars, all in unison.
Here’s what the transhumance traffic looked like this morning here in Sant’ Ippolito.
You’re not going to get any lectures from me today on the importance of preserving open spaces or our pastoral traditions. I just like the clanging sound of the bells—and the fact I’m not in a car, or on a bike, stuck behind these slow-footed commuters.
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.
Clarification: Due to a production error, yesterday’s Bull Sheet carried an incorrect “dek” caption. It was the dek caption from the August 16 Bull Sheet. My apologies for the confusion.
Today's read
Biden calls for more companies to mandate vaccines—Fortune
Uber and Lyft prepare for an epic legal battle—Fortune
Moderna Stock Heads to the Moon—Wall Street Journal
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Since the onset of the coronavirus pandemic, median house prices in the U.S. have jumped a whopping 24%, my numbers-crunching colleague Lance Lambert calculates. There are signs the housing market is beginning to cool off, but there are all kinds of quirks that make this a unique time to be buying or selling a house. Here are six takeaways on the housing market.
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