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Weekly Memorandum 5/24/2021

Stocks are up nicely to start the week after trading lower for most of last week. However, similar to the previous week, a mid-week rally ensued and closed equities well off the lows. Such price action is typically construed as bullish, and so now we will see whether this multi-week chop-fest will come to an end soon. The capital flows with respect to sectors suggests that we are late-stage in this equity rally in terms of shorter-term cycles.

Bonds finished slightly higher last week, but have yet to form any sort of meaningful higher-high or higher-low. As a result, the downtrend is still very much intact in debt markets. The U.S. Dollar finished lower on the week, but well off the lows. If interest rates continue to rise, we should see global capital start to bid up USD. For now though, it seems as though they are still wanting more in terms of yield.

The bloodbath in cryptocurrencies continued last week too, while precious metals continued higher. In other words, pet rocks > digital rocks in this market right now. Grain markets were mixed last week, but livestock was up nicely.

A new Mercator Letter was published yesterday. We outlined our global macro thesis in more detail there.

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