September 12th, 2021
North American stock markets and European bourses retreated over the shortened trading week (many markets were closed on Monday in observance of Labour Day), but Asia Pacific exchanges extended their gains, buoyed by political optimism and stronger trade data. For the past week, the DJIA retreated 2.2%, the S&P 500 fell 1.7%, the 50/50 Nasdaq/Russell benchmark lost 2.2%, European bourses dropped between 1% and 2%, and the Asia Pacific stock markets picked up between 4% in Japan and 1% for the Hong Kong Hang Seng. Our BSD Global Tech Hedge Fund gained 0.2% last week. Several factors weighed on western sentiment, including September’s reputation for being a weak month for stocks. The previous week’s significant August payrolls miss seemed to linger in the minds of investors and exacerbate worries that the delta variant of the coronavirus was slowing the economic rebound. Interest rate yields edged higher on the week after the ECB decided to move to a “moderately lower pace” of bond purchases for the rest of the year, after a rebound in European inflation. Japanese equities extended their gains over the week, buoyed by political optimism and expectations of further fiscal stimulus under a new prime minister, following the decision by current PM Suga to step down.
Investors will get a test this coming week when the consumer price index report drops on September 15 to give a read on inflation trends in August. The latest snapshot on inflation comes just a week before the Federal Reserve’s important September meeting. At that meeting, the Fed is expected to discuss more details about its plan to taper down its bond buying program, or quantitative easing. The economic calendar also includes updates on manufacturing, jobless claims, consumer sentiment and a high-profile retail sales report on Thursday, September 16. It will be important to watch discussions in the U.S. Congress as it begins to put details around the infrastructure spending and what type of tax increases will be proposed to pay for it. The tax decisions could have big implications for corporate earnings, which have been a big driver of the stock market’s gains. Apple hosts a special streaming event next week with all eyes on what new products are on the way from Cupertino. Zoom Video, Palo Alto Networks and Crocs hold special investor events, while Oracle will report earnings. With more market volatility expected, your BSD Global Tech Hedge Fund is 92% invested across a couple dozen tech vendors and tech end-users, thereby allowing the Fund to participate if this stock market continues to melt up, but We also have a 65% short equity indice hedge on the notional value of the invested stock portfolio that will incrementally grow (from the laddered Nasdaq put options strategy) if the market deteriorates