Mon, 03/29/2021 – 10:30
Last Week’s Close
E-mini S&P 500 Futures (June): Settled at 3964.75, up 64.25 on Friday and 65.00 on the week
E-mini Nasdaq-100 Futures (June): Settled at 12,966.75, up 196.25 on Friday and 122.25 on the week
U.S. benchmarks roared higher into the close Friday. It was a terrific sight to see, but the story certainly had layers, and like an onion they were peeled back through the weekend.
First, in Thursday’s Midday Market Minute, Bill Baruch discussed how the constructive hold of support early in that session set the stage for a friendly Friday. This undeniably brought bullish technical tailwinds due to seller’s exhaustion, shorts covering, and fresh buying hitting the tape. Remember, this is a bull market.
ViacomCBS had grabbed headlines through an ugly week as losses mounted. In the end, the stock finished down 50.5%. Others were Discovery -45.8%, Tencent -33.9%, and Baidu -19%. It was revealed that losses leading up to Friday forced the liquidation of position for the family office Archegos Capital Management. Goldman Sachs was at the center of massive block trades that sent ViacomCBS down by as much as 40% on Friday alone.
As layers were peeled back, it became apparent that several banks holding assets for Archegos had sustained sizable losses. Credit Suisse and Nomura are the most notable; they were each down about 13% ahead of the bell. With word that additional positions are still set to be liquidated and other banks potentially on the hook, the news is broadly weighing on the financial sector.
The XLF was -1.5% premarket and Goldman Sachs was down more than 2%. On the other side of the story, such a large and concentrated position in these high-beta tech names was likely hedged by index exposure. In this case, Archegos was probably short the Nasdaq and Friday’s surge was aided by their short covering.
With a melting pot of narratives, it certainly makes for another exciting week. The White House is now expected to divide what was a $3 trillion spending bill into 2 parts, with the first part focused on infrastructure and announced later this week. The second will be unveiled in April and will focus on Covid-19 relief.
In Europe, the Covid-19 case count is growing, and German Chancellor Angela Merkel has threatened tighter lockdowns. However, the UK is set to relax restrictions.
The container ship blocking the Suez Canal has been freed and it’ll certainly impact oil markets.
Lastly, a jam-packed economic calendar is quiet today, but builds up to Friday’s Nonfarm Payroll report during a brief holiday shortened session.
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