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Weekly Memorandum 12/21/2020

Stocks are down notably this morning, as we enter the shortened trading week due to the holiday season. Markets will close early on Thursday, and be closed totally on Friday this week. This past week, we saw equities close at their highest weekly levels in history. On the surface, this is hardly a bearish characteristic. But there are risks rising in equities right now, and we note that sentiments of complacency and euphoria are rising. If stocks close out near their lows today, it would be a very strong signal that we could see volatility rise in the short-term.


Bitcoin was another big story last week, as it surged to new all-time highs. Ethereum and Litecoin are not far behind, but we are noting the potential of volatility carrying over into this sector as well in the short-term.


Last week also saw Crude Oil and other commodities close out at their highest weekly levels in history. We could be on the cusp of an inflationary 2021 at this current rate, and it ultimately depends on the U.S. Dollar, which closed out at its lowest weekly level in years this past week. The response from capital markets in the face of a falling dollar has been rising interest rates on Treasuries. With the Fed continuing its QE program, one can't help but wonder at which point they would step in to put a ceiling on rates, assuming they even wish to do so.


On a side note, we will be publishing a free special report today titled: Uranium in 2021. This report will contain our outlook and analysis for this downtrodden sector next year. The last issue of the Mercator Letter for 2021 was also sent out yesterday. Annual subscriptions are still available for $40 off for the remainder of December with coupon code 'MERCATOR.'



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