2022-10: Key Drivers Retreat to 2020-2021 Price Levels

As of Wed 2022-10-26, from 2-day ahead prediction, the common drivers behind US Real Interest Rates DFII5, DFII10, DFII20, DFII30 are

• ASML (industrial, semiconductor manufacturing)

• Lam Research LRCX (industrial, semiconductor manufacturing)

• Walgreen Boots Alliance WBA (consumer, pharma retail)

• BlackRock BLK (financial)

• Meta Platform META (social media / web3)

The real interest rate is the nominal interest rate that government bonds bear, minus (market-implied) inflation rate.

The top 5 common drivers behind US Equity QQQ, SPY, DIA are

• Union Pacific UNP (transportation, railway)

• Lam Research LRCX (industrial, semiconductor manufacturing)

• US 30-Year Treasury Interest Rate DGS30 (interest rate)

• General Dynamics (industrial, defence)

• Nvidia NVDA (industrial, semiconductor)

Before last week, the key drivers of US Equity were all everyday consumer or transportation. Semiconductor fell out of the pack. Since last week, the semiconductor is making a comeback.

Let’s look at UNP, LRCX, GS over last week. First LRCX, GS made good earning announcement and started the week by rising. Then on Thursday, some money came out of Union Pacific UNP and pushed it down 7% relative to Wednesday.