Sethi Associates

  Daily Summary – June 30, 2021 - A Quiet End to A Strong First Half US equity markets closed out a strong quarter and first half of the year (it was the 2nd best first half since 1998) with one of the least exciting days with all of SPX, NDX, Naz, and RUT finishing within a thirty basis point band.  Growth today was the laggard.  The band ranged from Naz on the downside (-0.17%) to SPX on the upside (+0.13%).  Of course, it's not just today.  The 5-day rolling realized volatility for SPX is 3.7.  Style box much more favorable to value today than last few.  Bit of a bias to large caps. Note: I will have a few "month-end" notes but there's too much for today so I'll be interspersing them over the next few days. Major Market Technicals An ATH is an ATH I guess (again) and we had it (again) for the SPX (fifth in a row).  With the muted action, nothing else worth noting. Monthly charts all remain overbought but in great shape otherwise well above 20-MMA. SPX Sector Fl

EIA - Summary of Weekly Petroleum Data for the week ending June 25, 2021  US DoE Crude Oil Inventories (W/W) 25-Jun: -6718K (est -3850K; prev -7614K) - Distillate: -869K (est 1000K; prev 1754K) - Cushing Crude: -1460K (prev -1833K) - Gasoline: 1522K (est -900K; prev -2930K) - Refinery Utilization: 0.70% (est 0.45%; prev -0.40%) EIA not quite as strong as API report but still another big crude draw (last three weeks have seen total crude draws of around 2.2mb) and like API showed a build in gasoline and small draw in distillate. In other products, builds in propane, "other", and ethanol with draws in residual and jet fuel. Also another good sized SPR draw (-1.4mb). Netting it all together, total products drew down by -6.0mb after last week's -7.5mb draw with SPR to 1,278.3mb. Also notable this week was another large draw from Cushing which is indicative of a tight market. Cushing is now at lowest levels since March 2020. Crude - Production flat, imports down -536kbd,

  US Pending Home Sales (M/M) May: 8.0% (est -1.0%; prev -4.4%) - Pending Home Sales NSA (Y/Y) May: 13.9% (prev R 53.7%) May pending home sales pending home sales (which are contract signings not actual transactions so a little more forward looking) deviated from the other May housing reports with a big increase m/m.  Again, as this is contract signings, this bodes well for sales in June and July.  All regions saw m/m increases.  Here is some commentary from the report. "May's strong increase in transactions – following April's decline, as well as a sudden erosion in home affordability – was indeed a surprise," said Lawrence Yun, NAR's chief economist. "The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings." Although there has been a series of obstacles over the last year, including an unprecedented pandemic, record-high prices and all-time low inventory, buyers are still lining

 US ADP Employment Change Jun: 692K (est 600K; prevR 886K; prev 978K) Beat this month from APD, but May was revised down by roughly the amount of the beat, and it was a deceleration (as expected) but still showed solid job growth with services jobs (+624k) again making up the vast majority of the job gains (full tables below).    With the exception of IT (for a  fourth  consecutive month) and professional management (which lost 1k)  every size and sector showed solid if not robust growth, with a very equal distribution by company size .  Again this month leisure and hospitality made up more than half of the service sector gains.  Goods producing jobs up 68k roughly half of last month.  From the report: “The labor market recovery remains robust, with June closing out a strong second quarter of jobs growth,” said Nela Richardson, chief economist, ADP. “While payrolls are still nearly 7 million short of pre-COVID-19 levels, job gains have totaled about 3 million since the beginning of 20

As we approach the open... - 6/30/21 As we approach the open of trade of US equities in NY, after increasing global Covid restrictions, some disappointing Chinese PMI data, and potential quarter-end rebalancing, equities trade mostly to the downside with small caps again the laggard today with RUT indicated down around four tenths of a percent, SPX one tenth, and NDX around flat levels. In U.S. corporate news: Micron (MU 84.01, +1.08): +1.8% after the stock was upgraded to Outperform from Market Perform at BMO Capital Markets ahead of its earnings report after the close.Constellation Brands (STZ 231050, +0.52): +0.2% after beating EPS estimates and raising its FY22 EPS guidance in-line with expectations. General Mills (GIS 59.82, -0.21): -0.4% despite beating top and bottom-line estimates.  Asia Major equity indices in the Asia-Pacific region were mixed on the last day of the second quarter. Japan's Nikkei: -0.1% Hong Kong's Hang Seng: -0.5% China's Shanghai Composite: +0.5