Chip Shortage & Higher Yields

Friday was a seesaw session that saw the S&P 500 edged higher to eke out a gain for the week that began with a disastrous start. But market breadth was negative, especially for the NASDAQ, as rotation from growth into value has become the dominate style impulse.

Portfolio Approach

This morning, we closed a Technology position in our Hotline Model Portfolio.

Today’s Session

There is more pressure on growth, as supply chain issues are impacting the chip sector and higher bond yields are also making it difficult for mega cap growth. One of the key mega cap names, Facebook (FB), continues to struggle with its image, so its postponing its “kids” version of Instagram.

The ten-year yield is gaining momentum to the upside after breaking out through an ascending triangle last week. The last time yields spurted higher the concern was about how quickly they climbed and not necessarily on the level.

Durable Goods saw business investments climb +0.5%, which is beats Wall Street consensus.

Overall Durable Goods surged 1.8%, which is 200% better than the street consensus of +0.4%,

Key components

• Nondefense aircraft & parts +77.9%
• Capital goods +6.7%
• Transportation +5.5%