Important week ahead
An important week of figures has begun. In the macro area, the focus in the second half of the week will be on the American jobs figures. Jerome Powell recently indicated that employment in the United States still has a long way to go before it returns to the level it was at before the outbreak of the corona pandemic. Yellen, in turn, as the new Treasury Secretary, indicated that Biden’s plan to raise the minimum wage to 15 dollars an hour will have only a minimal (negative) effect on the US labour market, according to her. According to her, the proposal will do more good than bad for the US economy because it will give millions of American workers a higher disposable income, and they will no longer have to work two or more jobs to make a living.
To date, 37 percent of companies in the S&P 500 have presented their results. Of these, no less than 82 percent reported earnings per share that were better than expected. If we look at the realised turnover that is published, we see that 76 percent of the companies report a higher turnover than was expected beforehand. The figures from companies in the information technology and financial sectors, in particular, have shown the biggest positive surprises to date.
The latter is in line with the ‘insider selling’ survey. In the United States, insiders must report to the Securities and Exchange Commission (SEC) if they sell shares of their own company. Overall, insider selling in the United States has reached its highest level in ten years. Research shows that the number of insiders who are net buyers (purchases -/- sales) is only 10.8 percent. That is the lowest level in the last ten years. It is even 2.2 standard deviations below the ten-year average. In other words, the mood among executives is very gloomy when it comes to shares of their own company. By comparison, in March (when the corona bottom was set) this percentage was still 62.5 percent. At the time, this proved to be a good indicator for the market.
But last September executives were also very gloomy. Then, too, there was large-scale insider selling. At the time, that was the highest percentage of sales since 2015. However, then it turned out not to be such a good indicator. We all know what happened to the stock market in recent months. The fact that the presidential elections were still to come at the time will have played a major role in this. That made the situation more complicated. It was not necessarily the result of a lack of confidence in one’s own business, but rather the possible outcome of the elections. But, here’s the thing: the sectors where net purchases are highest at the moment are energy, financials, and utilities. So that is where insiders are most optimistic, and that in turn is consistent with the positive surprises coming out of that sector.
The investors who are active on Reddit are also looking forward to it. After GameStop, they have now turned their attention to silver, since there also appear to be large shorts in it. Silver is often seen along with gold as a refuge and a possible hedge against inflation, but it is much more than that. It has 85 percent industrial applications and is indispensable in, for example, the green revolution and the rollout of 5G. After the call on Reddit, a number of (small) investors turned to silver mining companies and silver futures. This morning, the spot price of silver was up 6.7 percent.