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Stimulus and Unemployment | Flow Traders Investment Competition | Week 9


As the trading week was shortened, due to holidays, we saw equities beginning the week on a positive note. The major indexes hit all-time highs, for example the S&P 500 on monday. The key reason for this was another round of unemployment benefits and stimulus checks  The market has increasingly focused on the size and magnitude of the stimulus bill as well as the rising coronavirus case count and initial stages of the vaccine rollout. 

Shares in Europe rose, lifted by the UK-European Union (EU) trade accord and the approval of a U.S. fiscal stimulus package. The Nikkei 225 Stock Average advanced 3.0% and closed at 27,444.17. The SSEC Index rallied Friday to its highest close since February 5, 2018, while the blue chip CSI300 Index recorded its highest close since June 15, 2015, according to Reuters. Year-to-date, the SSEC Index advanced 14% and the CSI300 Index rallied 27%, buoyed by signs of an accelerating economy as China became the first major world economy to successfully contain the coronavirus.

Stocks closed out a year of solid gains led by the technology-heavy Nasdaq Composite Index, which notched its best annual performance since 2009. Health care shares outperformed within the S&P 500 Index, and consumer discretionary shares were also strong, helped by gains due to an index addition (Tesla). Energy stocks lagged, and the large technology sector was also weak. Trading was relatively light ahead of the market’s closure on Friday in observance of the New Year’s Day holiday.

On the economic front, the U.S. Bureau of Labor and Statistics released initial jobless claims (787.000) that were below expectations and the release one week before. Although positive, the levels are still firmly elevated from pre-pandemic levels and point to a job market that is still under stress. In addition, U.S. house prices rose faster than expected in October, but November pending home sales fell by 2.6%. In Japan, November’s reading of industrial output growth underscored the fragile state of Japan’s economy, as the release was lower than expected. The Japanese Ministry of Economy, Trade, and Industry’s latest survey showed that manufacturers expect a further output decline in December and a sharp 7.1% rebound in January. Separately, the government reported that Japan’s retail sales dropped in November, and consumer prices declined in Tokyo at their fastest pace in a decade.

Turning to the investment competition. The year starts, for sure, very well for Fundamenta Fortis, who is ahead of the pack with a B&R M2 of 7.03%. However, no group was able to outperform our B&R Benchmark: MSCI World EUR Hedged ICTS ETF. Following up, we have CFQ and Omega Investments who have a M2 of 6.06% and 5,94% respectively. In terms of absolute weekly returns, Ares Investment Group gained the most, with a 4.18% return. However, on the other side of the spectrum we have Next Generation lagging tremendously with a B&R M2 of -8.18%. We also have quite some shifts in the rankings, with, for example, Ares gaining +28 spots, whereas Mercury Investment Club lost -17 spots.

From now on, we will also update you on the new investment competition. At the moment, no investment group made an investment for this competition. 


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