Commenting on the stock market rebound from Tepper’s comments and today’s markets, strategist Louis Navellier wrote in a note to investors:
[soros]Q4 2020 hedge fund letters, conferences and more
The Stock Market Has An Impressive Rebound On David Tepper’s Positive Comments
Well, the stock market’s had an impressive rebound largely due to the fact that David Tepper had some positive comments on CNBC, implying the interest rates, aren’t going to rise much more . . . Mr. Tepper’s impressive track record notwithstanding, no one can predict the treasury bond market because, at $28 trillion, it’s too big, it’s $28 trillion.
There will be big treasury auctions this week and the focus will be on bid to cover ratios, to see how much bidding there is and on the Fed to see if they have enough quantitative easing to control treasury yields.
The Fed is clearly allowing treasury bond yields to rise. And the yield curve is getting a lot steeper and they’re dedicating more their quantitative easing to the short end of the curve. But nonetheless, the market was oversold, it’s due to balance.
The economic news is very, very positive. We’re going to have great retail sales because of the stimulus package. The $600 debit cards they sent out in January caused retail sales to spike 5.3%, excluding vehicles was 6.1%. The $1,400 checks out it is going to cause consumer spending to surge as well.
An Incredibly Good Manufacturing Sector
We have an incredibly good manufacturing sector right now, even with the chip shortage that is curtailing automotive production at Ford and GM, briefly Tesla and some other plants. And the housing market’s healthy so the demand for furniture appliances is very, very strong.
Net, net, net . . . strong manufacturing sector, we have strong retail sales, we have checks in the mail and of course COVID-19 is going to continue to diminish with rising vaccinations.
So the Atlanta Fed’s looking at least 8.3% GDP growth for this quarter and I believe US GDP growth is going to impact the world more than China’s GDP growth this year. China is forecasting 6% GDP growth this year, when they forecast it they tend to hit it . . . I don’t know if that’s a communist party benefit . . . but they definitely tend to hit their goals. But because the US economy is a third larger than China our good start this year is really going to help lift the entire world economy.
Inflationary Pressures Brewing
All this growth does cause some inflationary pressure to brew. Crude oil prices are very high and if this continues could hit GDP growth. But right now we’re on the track for a very strong economic rebound.
On the earnings front, first quarter are going to be better than they were in the fourth quarter. And they were stunning in the fourth quarter. We’re going to have this all year because year over year comparisons are just easy because we’re comparing to the COVID economy last year.
The peak sales and earnings momentum will be in the first quarter and the comparisons will get a little tougher as a year goes on. There’s a lot of good news it’s pouring out here so it’s time for the market to party.
No Retest Is Necessary
There is some sentiment out there that would like to see one more retest. I would argue the intraday lows last Thursday were a new low for the NASDAQ market and no retest is necessary.
Still, we might have some more bumps this week, and yes, their might be another retest or even two. But the key is as long as the retests are in light volume we’ll be fine, because that means there’s no panic selling. Use any dip as a buying opportunity, hang on and enjoy the ride.
