2023-05: Dollar's value, chipmaking driving real interest rates, Equity hanging in a balance except the tech up
According to tsterm, and using results from 2-day ahead horizon,
For about two weeks around the beginning of May, Nvidia NVDA was driving mostly everything from real interest rates, through equity, Bitcoin to commodities. They produce the Graphics Processing Unit (GPU), a key component for training Artificial Intelligence (AI) apps.
Now that the buzz is a bit down, as of Thu 18 May 2023, for 2-day ahead forecast horizon, the common causally predictive factors (aka “drivers”) behind US 5-, 10-, 20-, 30-Year Real Interest Rates DFII5, DFII10, DFII20, DFII30 are
NextEra Energy Inc (energy, clean energy)
EURUSD (currency, dollar’s relative value)
ASML Holding NV ASML (industrial, sells technology that enables chipmaking)
US 5-Year Real Interest Rate DFII5 (real interest rate)
US 10-Year Real Interest Rate DFII10 (real interest rate)
As a recall, real interest rate = nominal interest rate - market-implied inflation rate for the same term.
One can search for “DFII5; DFII10; DFII20; DFII30” and will see the computed top common causally predictive factors along with the predictions. Notably, the farthest 30-Year Real Interest Rate DFII30 is being strongly predicted to be up. So it looks rosy for the long term, for the moment being.
The US Equity is being driven by big everyday consumer, industrial and technology brands. Other than the technology ones, they are hanging in a balance, with no clear direction as of late.
— The technology stocks are undeniably up: there is a finer picture here. If one does the search, AAPL is partially being driven by Japan equity (their index at the historic high post the 90s crash) and the chipmaking ASML. CRM and VRSN offer the service of digitalisation. Note however, the Price-to-Earning ratio of CRM is currently at the height of 1,022.
The common causally predictive factors behind the major index ETFs QQQ, SPY, DIA are
Amgen Inc AMGN (biopharmaceutical)
Ulta Beauty ULTA (consumer)
United Health UNH (healthcare)
Expedia EXPE (consumer)
Starbucks SBUX (consumer)
Caterpillar CAT (industrial / financial service)
Apple Inc AAPL (technology)
Salesforce CRM (technology)
Verisign VRSN (technology)
Emerging Market Bonds ETF EMB (fixed income, emerging markets)