December 13, 2021
Good morning,
The fourth quarter rally resumed last week as laboratories around the world revealed Omicron’s characteristics. Santa is back, but not for everyone it seems. While the S&P 500 made a new closing high on Friday, none of the NASDAQ Comp, Russell 2000, Dow or Wilshire 5000 managed to do that. Much of the rest of the world, meanwhile, can only dream of a Santa rally. The MSCI ACWI ex-US (All Country World Index – no US), which admittedly is impacted by the dollar’s strength, is nevertheless languishing at levels first attained in mid-January of this year.
The focus for investors this week is whether central bankers turn into some version of the Grinch. Our Fed meets Wednesday and it seems that talk of an acceleration of the taper and a likely shift in when they expect to raise rates (dot-plot messaging) is widely-expected. The VIX remains elevated (~20), suggesting markets are unsure about this week’s marquee battle: Santa vs The Grinch.
Be well,
Mike