The View at Two – 3 February 2021

On the Road Again… The road to all-time highs that is. US indices are green again for the third time this week, albeit it not as convincingly as Monday/Tuesday, but the action still serves to put last week’s frenzy even farther in the rearview mirror. It seems inevitable we’ll retest the highs, but once we get there we’ll be faced with the familiar question of whether Rotation / Reflation has more short-term juice left or whether Growth/Tech will have to lead the way as we impatiently wait for more progress on the vaccine rollout and economic recovery. A look at the sector table today provides no clear answer: Energy is the best performer as crude prices responds to renewed commitments from OPEC+ to clear pandemic surpluses, and Banks are again following bond yields higher as stimulus/inflation expectations heat up. On the other hand, Media is up sharply thanks to Alphabet (GOOGL +9.0%) making an earnings beat look as easy as A-B-C, though if Spotify (SPOT -6.7%) were in the S&P that might look a little different (our analyst cutting ests materially after earnings). Retail could have followed seeing as Amazon (AMZN u/c) also blew the doors off consensus by almost doubling EPS expectations, but investors are mulling over Jeff Bezos’s decision to transition out of the CEO role. To the downside, Semis are taking a breather from their breathless rebound, and coincidentally Autos are in the red as GM (+2.8%) and Ford (F +2.9%) admit further trouble with semiconductor shortages; the two carmakers pared intraday gains, however it’s actually a pullback from the heavily weighted Tesla (-1.8%) that has the sector in reverse. Disappointing reports from Amgen (-2.9%) and Biogen (BIIB -5.0%) have Pharma well in negative territory despite better numbers from AbbVie (ABBV +2.9%).