A resilient US economy triggers a selloff in Treasuries
US treasuries sold off last week, contrasting the consensus of lower interest rates a few days before. This change was triggered by a strong labor report, further exacerbated by comments from large US banks suggesting retail consumption continues to be strong.
The table below shows a negative buy-indicator, which estimates that 64% of volume traded in treasuries were sells. Furthermore, the mentioned negative dynamic in treasuries happened with a lot of strength. Volumes increased more than 3x vs. the previous week.
Source: Investment Analytics GmbH
Mild positive dynamics for US mid cap stocks
Stocks had a positive performance last week, yet the uptick did not happen with the same strength of the bond market's selloff. Only mid-caps saw mild increasing volumes. This suggest equity investors remain skeptic about how much further the market can go.
Stocks with strong negative correlations with treasuries outperformed the market by 2% on average, according to Investment Analytics estimates. Yet, this trend may not stick for long.
Performance and flows of main stock indexes
Source: Investment Analytics GmbH
Stocks with unusual price moves
IA's models automatically map the action and analyze stocks. The automated table below shows stocks that experienced unusual moves last week: an acquisition on the lithium space, low risk stocks, earnings surprises, and the high profile face-off between Tesla and Uber.
Uber-Tesla's faceoff was among the most covered single stock news of the week. More color is found below the following table.
Company Summaries (GenAI generated)
Source: Investment Analytics GmbH
Strong tailwinds on Uber stock
Uber stock got a big boost last week as a potential competitor, Tesla, failed to impress with the presentation of its cybertaxi. It was feared that a Tesla self driven car could present a threat to Uber's business models, eroding Uber's leadership in the ride-hailing segment. The lack of details about the features of the cybertaxi and the permits necessary to launch the self-driven car dampened the concerns of competition coming from Tesla.
Increasing sales, margins and positive inflows from investors contrasts Uber vs. a Tesla with decreasing margins, deceleration of sales and lack of flows supporting the stock in the short term. Coincidentally, both companies have the same valuation of 1% operating profit yield vs. their respective stock price. The difference lies in the consistent improvement of Uber's fundamentals.
Tesla vs. Uber - Same profit yield vs. stock price
Source: Investment Analytics GmbH
Tesla vs. Uber - Performance, risk metrics, flows & correlations
Source: Investment Analytics GmbH
Analysts' views, flow dynamics and margin expansion support UBER
Comments