Market Moment
Glen Eagle®: America’s Women-Owned Trading Desk®
02/01/2021
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Retail Trading Power: As GameStop has soared more than 1,600% in less than a month renewed attention has been given to the power of retail investors, which has grown significantly in the quarantine environment. In fact in the past year more than 10 million new retail trading accounts have been opened. This has resulted in retail investors now accounting for more than 20% of all equity trade volume. Through social media platforms like Reddit and Facebook many of these retail investors have come together to buy stocks that they believe have been unfairly targeted by the short positions of Wall Street Hedge Funds. The plethora of buying from these retail investors is one of the main reasons why the most shorted stocks in the Russell 2000 have risen more than 80% since October while the least shorted are up less than 20%.
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Small Cap Managers Challenged: Despite the impressive rise in specific stocks over the past few weeks some small cap managers are forgoing the potential for quick gains and limiting their exposure entirely. Academic studies show that this approach may pay off since companies with high short interest (like GameStop, AMC, and National Beverage) tend to underperform over the long-run. If this proves to be the case small cap active managers could be vindicated and may be able to add to their impressive historical record…About 60% of funds in the small cap growth category have beaten the market over the past five years (compared to just 22% of large cap funds).
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Poor Reception for JNJ: Friday morning JNJ announced that its covid vaccine was 66% effective, which was lower than the 80% expected by some analysts. The stock price fell by over 3% in response. The reaction however may be premature considering the fact that only around 1.3% of the US population has received the two vaccine doses from the existing vaccine providers (like Pfizer and Moderna). Since JNJ’s vaccine involves only one shot and has less stringent temperature requirements than the existing vaccines it may be leveraged as a key component of the economic re-opening strategy.
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Quiet China Policy: As President Biden entered the White House many investors believed that he would have a less confrontational approach to China. This outlook has been reflected in the iShares MSCI China ETF (ticker: MCHI) which has risen 10% year-to-date. Many believe that Biden’s focus on fighting climate change and reviving the Iranian Nuclear Deal will force him to cooperate with China, but that view point may be overly simplistic. As Treasury Secretary Janet Yellen pointed out in her recent confirmation hearing, the new administration will still need to address concerns around intellectual property, illegal corporate subsidies, and human-rights violations.
Economic Calendar
Monday: Markit US manufacturing PMI (Jan), Construction spending (Dec)
Tuesday: Home ownership rate (Q4)
Wednesday: ADP Employment report (Jan)
Thursday: Productivity (Q4), Factory Orders (Dec)
Friday: Non-farm payrolls (Jan), Unemployment Rate (Jan), Trade deficit (Dec)
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US Futures
S&P 3736.5 +0.84%
DOW 30,059 +0.60%
NASDAQ 13,032.50 +0.94%
World Markets
FTSE 6465.00 +.90%
NIKKEI 28,091.05 +1.55%
Hang Seng 28,892
+2.15%
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Treasuries
3 Mo 0.06%
10YR 1.11%
30 YR 1.87%
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Currencies
Euro $1.2079
Pound $1.3712
Yen $104.93
Commodities
Gold 1863.2 +0.34%
WTI Crude 52.41 +0.70%
Silver 29.81
+10.74%
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Upcoming Earnings Calls
Monday - WMG, TMO
Tuesday - BABA, GOOGL, AMZN, EA, XOM, PFE, UPS
Wednesday - ABBV, AVB, EBAY, GRUB, PYPL
Thursday - CG, CI, CLX, F, MRK, PTON
Friday - CAH, SNY
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Consider working with Glen Eagle as one of your preferred partner trading desks
Client Focused Trading for large institutions, pensions, hedge funds, wealthy families, and private equity for over 30 years
Ansie Monaghan
Carol Ann Fernandez
Glen Eagle
4422C Route 27
PO Box 399
Kingston, NJ 08528
(609) 631-8231
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