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Weekly Memorandum 6/7/2021

Equity futures are flat to start the week, but we saw the S&P and Dow register their second-highest closes in history on Friday, which is hardly a bearish characteristic. We note that the Nasdaq continues to lag the broader market, and isn't as close to its all-time high compared to the S&P or Dow. This speaks to the capital flows within the market, whereby money continues to flow into value or inflation-sensitive names at the expense of growth and tech. For what it's worth, this type of outperformance is typically indicative of equities being in the late-stages of their rally.

Bonds scored a nice gain last week, and we may have seen a low of importance. If so, this could be the beginning of a flight-to-safety trade, even though it may take a few more weeks for equities to top out.

The U.S. Dollar continues to struggle, and we just saw Crude Oil close at its highest level since October 2018, which is significant. Agricultural commodities performed well last week too, while precious metals were flat. In the crypto-sphere, there continues to be some significant technical issues that have yet to be resolved. The main concern here is that cryptocurrencies exhibited a very high positive correlations with equities from March 2020-May 2021. That correlation is now near zero as a result of the crypto collapse that occurred in May. While it's unlikely equities collapse like crypto, we could see a correction of the sort sometime this summer.

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