Market update: US GDP advances 3.3%, investors run from tech stocks

30 Nov

by Mihály Tatár


Good Morning!


  • While the US GDP surprised to the topside again (this is almost obligatory these days, with only permabears never learning), showing a 3.3% Q/Q GDP growth and a 2.3% jump in personal consumption, the market sentiment made an interesting turn as investors dumped tech stocks massively (Apple -2.2%, Google -2.44%, Facebook -4%, Micron -9%, Applied Material -7.7%, Nasdaq -1.27%, wiping out about USD 60 billion), favoring instead the lagging transportation and domestic stocks from Target to Macy’s (SPX finished at -0.04%). Analysts have come up with several explanations: With the growing realization that the tax reform is likely to happen (sorry, CNN), a rotation is natural to businesses that benefit the most – as we know tech companies solved the tax issues for themselves – , and anyway, a switch from overbought stocks to laggards was long due in this old bull market. (The word ’overbought’ always comes up when things suddenly turn South. I would also add, as noted here in the spring, that Washington has gradually become very uneasy with the powerful, unregulated, but politically active tech giants. The overseas cash repatriation law will be only the first action of many.) With the market being happy that the worst has been avoided in the UK-EU relationship, the Pound rallied further, almost to 1.35 against the USD and to 0.88 against the Euro, with some banks calling for an even larger correction. (In my personal opinion, while this news is of course great compared to a complete Brexit breakdown,the political price of May’s cowardiance will be very high and will hit back later. Nigel Farage already talks about a ’sold out’ UK, and it will be hard to sell this kind of Brexit process as a victory tour. I must admit that the EU, which is now very experienced in the ’swamp-each-other’ kind of negotations, has done this well.)  Pressured in both directions by the US tax news and the ECB speculation (the German inflation came in at 1.8% Y/Y, which sounds alarming to German ears), the EURUSD traded around 1.1850, and oil prices also remained glued with the starting OPEC meeting (WTI 57.50, Brent 63.50 USD), as OPEC delegates talked to talk (’we are ready to extend production cuts until the end of next year’).


  • Showing both of the anxiety of yield-hungry investors and the might of large Asian companies, Chinese e-commerce giant Alibaba just issued 7 billion USD worth of Dollar bonds, attracting 46 billion USD worth of orders (six times oversubscription!). With this deal, dollar-issuance in Asia – even outside Japan – reached more than 300 billion USD this year, an all-time high, which compares with 186 billion USD in whole 2016.


Have a nice day,



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