Weekly Memorandum 5/26/2020

Equities are set to gap up following the Memorial Day holiday and shortened trading week. The Nasdaq is just over 200 points away from its all-time high, while the Dow and S&P 500 lag behind. We've seen many tech and biotech names outperform notably in the last few weeks, which explains the Nasdaq's leadership.


The Dollar is down slightly to start the week, but interest rates are up slightly. One very important observation in recent weeks is that spreads between investment-grade corporate debt and Treasuries continue to tighten. This is a sign that liquidity levels remain healthy in the market.


Crude Oil is trying to consolidate its recent gains in the mid-30 range. If this commodity continues to rally, we could eventually see some inflationary pressures translated over to debt markets. This market still has structural headwinds given that supply gluts don't go away overnight, and demand issues remain present with lingering forms of the lockdown still in effect.


Gold and Bitcoin are down a bit, but silver is performing well. If this bull market in precious metals is real, then we anticipate silver to skyrocket sometime sooner than later.


Soon enough, we will know whether this will be a year to "Sell in May and Go Away," or "Buy in May and Stay."


This weekend we will publish new editions of the Mercator Letter as well as the Mercator Crypto Report.

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