Signs of exuberance abound

Electrical vehicles, cryptos, and tech stocks all jump

Chart of the Day

It’s not just bitcoin marching higher by the day, yesterday the major electrical vehicle stocks also soared. The headlines were on Tesla given the move made Elon Musk the world’s richest man, but Nikola and Workhorse but rose by much more. Nio, which to some extent underperformed with a rise of ‘only’ 7.5%, is now up by over 1200% in the past 12 months. These are either justified moves based on world-changing technologies, or another example of irrational exuberance. Time will tell.


There was a lot of data to digest, starting with the initial claims which at least showed that claims did not rise any further. Bear in mind it is difficult to extract the key trends during holiday periods though.

Much like the manufacturing gauge, the ISM services index surprised to the upside in December. An average of the two implies annualized GDP growth will be about 5%, better than the consensus forecasts for a sharper slowdown in Q1.

The US trade data show the economy is not getting much of a lift from exports, which remain very depressed relative to imports - the surge in imports has sent container shipping prices soaring and is a reason to expect some upward pressure on inflation this year.

In the eurozone, the economic sentiment points to much weaker GDP growth than in the US.

The ECB is facing a long period of low inflation. The inflation data yesterday showed core inflation stuck firmly at 0.2% in December, and recent trends in wages imply it is going nowhere fast.


The FTSE 100 has been one of the best performers since the UK signed its Brexit deal, but continues to lag other markets over the past year. Despite the modest rise in real rates on Wednesday, the Nasdaq far outperformed yesterday.

Semiconductor stocks were some of the big winners, although in most cases remain below the highs reached in mid to late 2020.

The market moves have not been unambiguously positive. Several emerging market currencies slumped against the USD yesterday, including the Mexican peso, Russian real and South African ran, which goes against the narrative of rising global growth expectations.

The US dollar index also edged up, though certainly not by enough to break its recent downward trend.

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