Our Daily Notes

05/17/2024 11:37 China: Announced a relief package for the housing sector… Yesterday, the Dow Jones Industrial Average (DJIA) saw the 40k level for the first time in its history. It had seen the 30k level in November 2020. Although round numbers are important for investor psychology, the DJIA is a price-based index (companies are not weighted based on market value), the total size of Exchange Traded Funds that accept indicators cannot be compared to the S&P 500 or Nasdaq 100 BYFs & there are very few fund managers that accept indicators. In short, the S&P 500 seeing a “round number” and the DJIA seeing it are not the same. Stock selections in the DJIA are also being questioned in the market. Yesterday, with the US import price index coming in above market expectations, the dollar index faced reaction purchases from the lowest level in the last month. Good news: US 10-year bonds are still below the 4.4% level. The bad news is that the S&P 500 was at 4.2% when it reached record levels in March. Although the S&P 500 renewed its post-March record by closing above 5,300 this week, “everything is not perfect”. With the WMT (WALMART) balance sheet, mandatory consumption was the sector that provided the best return in the index yesterday. Although the S&P 500 saw a new record this week, when we look at the sector performances of the last month, infrastructure and mandatory consumption still stand out. A defensive situation… At the levels we are in, “correct stock choices” and positioning in strong balance sheets are important. In the economic data we received from China today for April, industrial production was announced above market expectations, while the weak trend in retail sales continues. The Bloomberg Industrial Metals Index is +21% as of the end of March… Housing prices in China also decreased in April. A relief package for the housing sector was announced. Leading indicators from the US and the final CPI revision figure for April in Europe will be announced today. The bond market is also important on the Chinese side. 30-year bond issuance stands out…