05 Apr Market Risk Report as of April 4, 2021
From Chief Investment Officer Tom Veale,
“There are times when it’s just hard to explain what is happening in the markets. Measure as we can, our various scales do not seem to always identify whether we are seeing storm clouds or just another typical day. I am hoping the book I have just started (“Extraordinary Popular Delusions and the Madness of Crowds”, by Charles MacKay) will shed some new light on this idea. The book was written in the 1800s, but the title seems timely.
Our SinglePoint Market Risk Indicator (MRI) dropped a point this week to 47 and the MRI Oscillator moved to negative 3 (modest decline in risk pressure). Two components (Speculation and Divergence Indexes) dropped to Neutral this week while two remain bearish. Will we see some of the bearishness unwind as this latest quarter’s results are revealed? We can only hope.
While the overall MRI is still bearish it appears there may be a topping out of risk relative to history. Thinking of the book title shown above and such investments as unprofitable electric car manufacturing and the various synthetic currency activities makes me wonder what is next. In the meantime, the NASDAQ Composite took the lead last week with nearly a 2.6% rise. Most areas of the market also rose but not quite as extensively. The 10 Year Treasury Coupon Rate remained unchanged while the yield on existing 10-year bonds dropped slightly to 1.685%. “