LiveWire

US budget airlines Frontier Airlines and Spirit Airlines will merge to create the US' 5th largest carrier by market share. Spirit Airlines (SAVE) gained 17%, and the US Global Jets ETF (JETS) gained 2.8% yesterday, now just -0.8% ytd. Traders are eyeing airlines as a key recovery play in a post-pandemic world. The JETS ETF still stands 23% lower than its highs of $28 in March 2021. Similarly, stocks of large US cruises including RCL and CCL are making a strong recovery, well ahead of the recovery in their underlying businesses. 

Markets are witnessing challenging times in early 2022, as the risk of rising interest rates from major central banks has reached elevated levels. Wall Street analysts also for once seem not to agree on the outlook; while some believe markets have already priced in future likely central bank hikes, others are more cautious and point to possible weaker-than-expected demand which could negatively impact companies bottom lines. The good news is that opportunities arise when there's fear in the markets. Given the recent strong earnings reports, strong labor market, and still favourable financing conditions, It's very likely that stocks keep producing better returns than bonds. In fact, the equity risk premium in Europe (Stoxx600 earning yield minus the 10-year bund yield) is reaching very attractive levels, compared to both its past and US equities.  

Bitcoin is trading at USD42'720 this morning, about 22% up from its closing lows on 22nd January. The leading crypto is now testing the upper end of its 20-day bollinger band, that could act as technical resistance, but not necessarily. Traders will be looking for bitcoin to take out USD43'000 next, to suggest continued strength. Strength in crypto is a particularly encouraging early sign of 'risk-on' appetite gaining momentum after a highly volatile start of the year that would have kept many 'would be' buyers on the sidelines. Euro Stoxx 50 are pointing 0.6% higher, and in the US, Nasdaq futures are a modest 0.3% higher.  

The US job creation was very strong in January, exceeding everybody's expectations. The Nonfarm Payrolls for last month came in at 467'000 nearly doubling the highest estimate in the Bloomberg economist survey. Additionally, hourly earnings growth was also upbeat at 0.7% mom (vs 0.5% expected). Recovery in jobs and higher wages pushed yields across the curve higher, as this increases the odds of a hawkish response from the Fed in March. The dollar gauge (DXY) also spiked on the back of rising yield and caused gold and other commodities prices to dip.

Investor expectations are high in this market and Meta is the latest victim. Its 26% single-day stock wipeout on Thursday triggered a growth scare in the whole market, sending investors hitting the sell button across tech names, pulling down the Nasdaq 100 by 4%. The USD251.3 billion single-day wipeout is the largest ever. We must ask ourselves, were some large investors willing to get $FB off their books at any price. As the dust settles, investors are debating whether the stock deserves a second look due to its solid financials, low valuation, buybacks, versus the threat of an increasingly difficult advertising business as a result of changes in the Apple IOS and changing consumer preferences to less profitable areas such as short videos. From a technical analysis perspective, the stock seats at a key long-term support level. The stock of the most-disliked brand is up 1.6% in US pre-market at USD241.6.