Cyclical currencies yet to show signs of weakness

DJ transportation average edging higher as well

Chart of the Day

It was a very bad day for many big tech-related names yesterday, with one electric vehicle maker dropping by almost 50%. But despite the weakness of tech stocks, there were still largely positive macro signals from other parts of the market. The NZD and CAD continued to rise against the USD, with the AUD little changed, which does not seem to be consistent with the idea we’re about to experience a broader sell-off. As we’ll see later, the Dow Jones Transportation Average also rose to a fresh record high, which will encourage those who follow Dow theory.

Macro

US house price inflation accelerated to 10.4% in December. Over the past three months, annualized house price growth has been 19.0%. That means the housing market is having one of its strongest three-month periods of all time.

The US Conference Board measure of consumer confidence rose in February. Consumers' assessment of the present situation improved but their expectations deteriorated.

The Dallas Fed service sector survey rose as the economy continued to re-open, but would normally be consistent with a lower national services ISM.

New Zealand’s central bank kept rates unchanged yesterday at near 0%, making its inflation-adjusted policy rate about -1%. Elsewhere, Inflation-adjusted policy rates range from a low of -2.6% in Brazil to a high of 4.2% in China.

Markets

It was a terrible day for the EV company Workhorse yesterday, which almost halved in price. Moves in the main EV stocks in the past week have ranged from a 51.7% fall in Workhorse to a 10.3% decrease in Nikola.

It was also another bad day for the main cryptos.

With tech names weakening, the US Nasdaq was one of the worst global performers in the past week.

Some good news for followers of Dow theory though, with the further rise in the DJ Transportation Average normally a good omen that we are not on the cusp of a broader sell-off.

The modest correction of platinum and palladium prices may also be related to the weakness of EV stock prices, given those two metals are in high demand from EV makers.

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