Wall Street Reaches Record Highs as Main Street Sentiment Hits 11-Year Lows

The comments below are an edited and abridged synopsis of an article by Tyler Durden

Since around 2000, Wall Street and Main Street have been decoupling. The Lehman crisis accelerated that divergence and policymakers’ response to the Covid crisis has driven the divide between Wall Street’s success and Main Street’s distress.

Wall Street Reaches Record Highs as Main Street Sentiment Hits 11-Year Lows - BullionBuzz - Nick's Top Six
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This divergence was highlighted recently when sentiment crashed to its lowest level in 11 years as stocks rebounded to record highs. Meanwhile, President Biden’s approval rating is tracking Main Street sentiment and not Wall Street euphoria.

Stocks almost made it back to green last week. The S&P was the best horse in the race, while Small Caps and Nasdaq were laggards. After four weeks of short-squeezing, the most shorted stocks ended the week lower.

Treasury yields were higher on the week, but the short end significantly underperformed amid all the inflation chatter. Five-year yields had their biggest spike since November 2019. That flattened the yield curve, prompting discussion of the potential for a Fed policy error.

And as break-evens surged, real yields crashed to record (negative) lows, providing support for gold.

Cryptos ended the week higher, but off their mid-week highs. Bitcoin topped $68,000 (a record), and Ethereum topped $4,850 (a record) before both fell back. ETH then rebounded aggressively, but fell back.

Gold had its best week since May, and silver had an even bigger gain. Gold topped $1,870, the highest since mid-June. Silver had a 5% gain (best week since May), to go above $25 and test its 200-day moving average.

Oil posted its longest stretch of weekly losses since March, with President Biden keeping investors guessing about whether he’ll act to tame higher energy prices that are driving inflation. At the pump, gas is at its highest since 2012.

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