To The Moon

Last week, US Stocks retreat as bond yields advanced：

The Dow Jones Industrial Average closed down by 0.29% at 36231.7.

The technology-focused Nasdaq Composite declined 4.53% to 14,935.9.

The S&P 500 fell 1.87% for the week to 4,677.03.On the public news sight:

• The yield on the benchmark 10-year U.S. Treasury note touched 1.80%, its highest level since the onset of the pandemic.
• The FED minutes revealed that policymakers had discussed faster and more aggressive rate hikes, with the first quarter-point hike in the official short-term rate coming as soon as March.
• Economic datas also mixed:The Institute for Supply Management’s (ISM’s) gauges of both manufacturing and service sector activity missed consensus expectations but still indicated healthy expansion. The ISM survey also indicated that supply challenges might be easing for manufacturers. Friday’s closely watchedjob data roughly half of consensus expectations, which suggested that many Americans were choosing self-employment.

For specific stocks:

The banking sector rose strongly last week with many commercial banks hitting new highs. Oil and energy stocks rose sharply, with Exxon Mobil and Halliburton rising more than 10%.

Weekly Financial Stocks Performance Heat Map

Weekly Energy Stocks Performance Heat Map

Weekly S&P Sector & Stocks Performance Heat Map

Below are 11 market sectors returns of S&P for the 2022 first week (as of the close on 1/7/22)）：

S&P sectors Weekly Returns

Precisely： Energy Sector rose 8.32%, the Financial sector closed up by 4.14%, the Basic Materials sector edged rose by 0.09%, and the Consumer Defensive sector rose by 0.03%.The Industrial Sector fell by 0.5%, the Utility sector fell by 2.17%, the Consumer Cyclical sector fell by 2.25%, the Real Estate sector fell by 3.94%, the Communication Services sector fell by 3.96%, the Healthcare sector fell by 5.24%, and the Technology sector fell 5.67%.

From a longer period of one-month data， Energy, Financial, Consumer Defensive, and Basic Materials sectors were still the top four gainers. The relevant reasons were analyzed as follows:

1、Energy sector Increases Reasons:

Starting from the second half of 2021, in order to cope with climate change, major economies around the world are carrying out electricity cleanup, among which European countries are at the forefront of the world. The European energy crisis has escalated, and the global shortage of electricity, gas, and coal has become more and more serious.

However, the global energy transformation cannot keep up with the demand. Although many countries are actively developing new energy industries and promoting energy transformation, from the perspective of the current global energy supply and consumption composition, the proportion of new energy is still very low, far from enough to make up for the gap in traditional energy supply.

• When the power generation of renewable energy decreases, the demand for natural gas power generation surges, and in the case of a shortage of natural gas supply, the price of natural gas continues to rise.
• When the cost of natural gas power generation is high enough, companies turn to oil as an alternative, which further increases the demand for crude oil and raises oil prices.

This is why the energy sector has risen 13.5% in the past six months and 35.7% in the past year, ranking first in the S&P 500 gain.

2、Financial Sector Increase Reasons:

The FED tightened its QE-Tapering policy and expected faster rate hikes boosted the Financial sector, with which many Financial stocks hit new highs last week.

In addition, under the previous "flooding" of stimulus measures, major Wall Street Investment banks have also benefited from the huge investment banking fees. In 2021, the scale of global mergers and acquisitions will be unprecedented, and investment banking revenue will hit a record high.

Thirdly, the market expects the Financial industry will report strong results in Q4,mainly due to lower-than-expected loan losses and high investment banking fees during the epidemic.

3、Consumer Defensive Increase logic：

Under the pandemic, inflation is still the focus of investors. The inflation in the United States has become more widespread, and expectations for future price increases are rising.

In the past Christmas season and New Year season, strong consumer demand still exists, people's essential consumer goods cannot be reduced, and consumer retailers had experienced a strong holiday shopping season.

Consumption is a long-term track and a rigid need in life. It is always necessary to look forward. Of course, it is necessary to treat some industries differently,  Investors need to pay attention to how the industry and demand change, and

4、Basic Materials Sector Increase logic：

Supply and demand are the core factors that affect the price of Basic Materials.On the one hand, the pandemic has had a negative impact on the supply of commodities. Major commodity-producing countries have difficulty in starting construction, the commodity industry chain has also been impacted. However, the demand for commodities generally comes from the needs of economic growth and industrial production.

As the pandemic received more attention in more countries and the global economy is recovering, the demand forbasic commodities has increased.Secondly, since 2020, in order to hedge against the impact of the pandemic, major economies around the world implemented ease monetary policies, So far the FED's total assets expanded from $4.2 trillion to $8.4 trillion. Under an inflationary environment, commodity prices also increased.

Thirdly, commodities are usually priced in dollars. As The U.S. economy fell into recession due to the pandemic along with the FED's extremely loose monetary policy and other factors, the U.S. dollar index fluctuated downward. When the dollar depreciates, the price of goods priced in dollars naturally rises.Finally, Investment Banks like Goldman Sachs, JPMorgan Chase, Citigroup, etc, forecasted the commodity market a better rebound, with the hype and speculation in the financial market intensified, the rise in commodity prices enlarged.

Finally ,

Would you like to Mark the Sectors you mostly Bullished?