Good Evening Yesterday, I pointed out to points of optimism that could hit stocks this week for a return to highs. The first, an approval of the Pfizer vaccine by the FDA, we saw today. The second, the potential for Fed Chair Powell to push off talk of bond tapering, is still to be seen for Friday but it appears the market could be pricing in the upside now. If the Fed does offer a wait-and-see approach for the market, it will be the third of September with the monthly employment report before we see any news that could derail the optimism.

Let's Talk Money!

MARKETS

	NASDAQ	14,942	+ 1.55%
	S&P	4,479	+ 0.85%
	DOW	35,335	+ 0.61%

• Markets:  All three major indexes closed higher Monday with the S&P 500 and the Nasdaq both touching fresh highs. Commodities jumped on a weaker dollar and Crude Oil surged by more than 5% back over $65 per barrel. It's hard to say if it's the potential for Fed-driven stimulus to be on the table longer or just general optimism over the economy that is driving the markets, but either way, stocks could have further to run even after an 18% return on the S&P 500 already this year.

BEST AND WORST SECTORS

• Sectors: Eight of the 11 stock sectors finished higher Monday with only the safety sectors; Consumer Discretionary, Real Estate and Utilities lagging as investors left the safety of yield-paying stocks. Energy rebounded with six of the top 10 stocks in the S&P 500 from the sector.
• Sector Trends: It was odd that, on a day that saw optimism surge back, interest rates fell marginally. There's still some fear that the delta variant will keep economic growth below expectations and that's hurting the cyclical sectors; Materials, Industrials and Financials though Energy is rebounding from a steep selloff. Analysts at Citi still expect the 10-year Treasury to end the year at 2% from its 1.25% level now. If that happens, I still expect cyclicals and the reflation trade to do well.

TOP STOCKS

• APA Corporation led shares of energy stocks higher with all 22 stocks in the sector rising by 1.6% or more. With their greater leverage to oil prices, those companies with more exposure to shale exploration like APA, were the most to benefit on the strong rebound in the price of oil.
• Moderna jumped on the FDA's approval of the Pfizer vaccine as investors positioned ahead of a potential approval for MRNA as well. Shares are still off the June high by 18% and I wonder how much further they can go. Moderna flat-lined from February through June until delta-variant cases started popping up around the world. When cases of the variant peak and start to come down, will even an FDA approval be able to help the shares?
• Occidental Petroleum, like APA Corp, rallied solely on the jump in oil prices and no other significant news. Other shale explorers to watch if oil prices continue higher would include; Devon Energy, Diamondback Energy and Marathon Oil.

Stocks

Policies Diverging on Cruise Ships Could Mean Opportunities in Stocks

Shares of major cruise lines jumped today even though we could still be a week or two from the peak in delta variant infections. Investors may be positioning ahead of the eventual boost when daily COVID cases moderate once again.

But policy differences among the carriers is leading to divergent share prices and could be an opportunity for investors. All the major carriers; Norwegian Cruise Line Holdings (NCLH), Carnival Corp (CCL) and Royal Caribbean (RCL) are down sharply since early June but NCLH is underperforming on a requirement for 100% vaccination among passengers. That means the carrier is not allowing children under the age of 12, since they are not approved for vaccinations, and could be missing out on family travel.

Norwegian passengers tend to be older and at the higher-end anyway so it might not be the hit to sales investors are expecting. Truist Securities analyst Patric Scholes found bookings for 2022 are up considerably for high-end sailings compared to 2020 while lower by as much as 25% for mass-market cruises. That’s good news for Norwegian and Carnival which offer a greater share of total sailings to more expensive destinations like Alaska and Europe compared to Royal Caribbean which has a higher share of Caribbean destinations.

The requirement for 100% vaccination could be a selling point for NCLH cruises, attracting passengers that want the extra certainty over cruises that might only have 90% of passengers vaccinated when including children. Either way, I expect all three carriers to do well once daily cases peak and start heading lower.

Cryptocurrency

Crypto Demand Up 880% in the Last Year

The resurgent prices of cryptocurrencies including the 60% run in bitcoin to $50,000 over the last six weeks is about more than just short-term trading. Bitcoin and other cryptocurrencies have marked triple-digit increases in demand over the last year alone, from investors as well as from DeFi applications.

According to blockchain analysis provider, Chainanalysis, bitcoin has seen demand grow by 880% over the last year with a 2,300% surge since 2019. While developed markets like the United States continue to drive prices, it’s the emerging countries that is seeing the most demand growth. Users in developing countries like Ukraine, Venezuela and throughout Latin America are realizing the benefit of cryptocurrencies for protection against government capital controls and runaway inflation.

More importantly though is the surge in DeFi and other smart contracts built on the blockchain networks. Think of it this way. These applications run on data in a blockchain, which is like an online spreadsheet. Everytime someone uses one of these applications or wants to have a contract transaction go through, it has to be validated by users of the blockchain which are then paid in coins. That means, as more and more applications are written and used, demand increases for coins used to validate them. It can be a little hard to wrap your head around (it was for me) but this is the ‘value’ people are missing when they say cryptocurrencies have no value. Coins like Ethereum and Matic are the ‘gas’ that makes the applications and decentralized finance run.

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