Tesla and the ARK Innovation exchange-traded fund were once joined at the hip. This is no longer the case, which could be a significant factor in 2022.
Last Monday, Tesla stock gained 2.5%, while the ARK Innovations fell 1.7%, despite the fact that Tesla ETF has the largest position. Nor is it a rare occurrence. Tesla stock is up more than 1%, while the ARK ETF has fallen more than 1% nine times in 2021, all since early July. There were no such days in the first half.
The relationship between Tesla and ARK Innovation shares has been just 0.5 since July 1, down from 0.8 during the first six months of the year. (A correlation of 1 means the two assets move in lockstep while -1 means they move in complete opposition.) 0.8 is higher than 0.6 in the last six months of 2020 and 0.7 in the first six months of 2020, The proof of this was both in early 2021.
Alas, that strong relationship worked to the detriment of ARK Innovation. In the first half, Tesla lost 3.7%, holding ARK back; The ETF rose just 5.1%, outpacing the Nasdaq Composite‘s
12.5% increase. Tesla grew 57% during the second half, but was unable to offset weakness elsewhere in ARK Innovation, which has fallen 26% since July 1.
Correlation is not causation, but one of the reasons why the relationship between Tesla and ARK has been broken. Tesla made up 10.2% of ARK Innovation’s portfolio as of September 30, but just 8.3% as of December 29. ARK Innovations Is Selling Tesla In Strength, But The Stock That’s Buying It On Dips — Including Roku,
zoom video communication,
And Coinbase Global- has underperformed. This is hardly a recipe for high performance.
markets around the world, Canada, including Japan and the United Kingdom, are closed for New Year’s Day.
census Bureau Reports construction spending figures for November. Consensus estimates for the total to grow at a 0.6%, month-to-month, seasonally adjusted annual rate of up to $1.61 trillion. This would be a record high, surpassing October’s $1.6 trillion.
labor bureau Statistics issues job openings and labor turnover surveys. Economists forecast 11.2 million job openings on the last trading day of November, 167,000 more than in October. Job openings remain close to a record high of 11.1 million at the start of this summer.
Institute for Supply Management released its Manufacturing Purchasing Managers’ Index for December. The reading is expected to be 60.5, roughly even with the November figure. The ISM’s PMI has 18 consecutive monthly readings of over 50, indicating expansion in the US manufacturing sector.
Costco Wholesale reports sales for December.
federal open market The Committee issues minutes from its mid-December monetary policy meeting.
economic bureau The analysis reports light vehicle sales for December. Consensus estimates are for a seasonally adjusted annual rate of 13.5 million vehicles. It will be 4.7 per cent higher than in November, but 17.2% below the year-ago level. Supply constraints, particularly global shortages of semiconductors, have hampered auto sales for the second half of 2021.
ADP releases its national employment report for December. Economists forecast an increase of 360,000 jobs in private sector employment, with 5.4 million jobs this year, after a loss of 9.5 million jobs in 2020.
Lamb Weston Holdings,
and Walgreens Boots Alliance reported quarterly results.
ism release Its services PMI for December. Economists forecast a reading of 66.9, nearly two points lower than the November figure, which was a record high for the index’s 23-year history.
Labour Department Reports initial jobless claims for the week ending January 1. For the four weeks in December, claims averaged 199,250, the lowest reading since October 1969.
Labour Department Releases employment report for December. The economy is expected to add 374,000 jobs, after a gain of 210,000 in non-farm payrolls for November. The unemployment rate has come down from 4.2% to 4.1%. With an average reduction of 343,300, payroll gains in three of the last four jobs reported came in well below estimates. The labor force participation rate is expected to range from 61.8% to 61.9%.
Write Ben Levishon at [email protected]