Joachim Klement, strategist at U.K. broker Liberum, looked at the performance of PE-backed IPOs. It turns out they outperform — both on the first day of trading, when they see gains of 27% vs 13%, and on a three-year buy and hold basis, at 30% vs. 21%. Klement cited University of Florida data between 1980 and 2019.

“In short, leave the private equity companies alone. They know what they are doing when exiting an investment and they live and let live,” says Klement.

The FTSE 100
UKX,
+0.40%
edged up 0.2% in midday trade. BP
BP,
+2.36%
shares rose 2% as Deutsche Bank upgraded the oil giant to buy from hold with a 26% increase in price target. The same bank lifted its Royal Dutch Shell
RDSB,
+1.87%
price target by 9%, as it said the decline in oil prices is an overreaction to the omicron variant news.

“Crude inventories remain below 5 year averages, extreme upstream capex discipline persists, several OPEC members are already struggling to meet their quotas, a return of Iranian volumes is nowhere in sight, underlying global oil demand has clearly been undented by 18 months of Covid and the threat of EVs remains a post 2030 issue at the earliest,” the analysts said.

A recent report that Saudi Arabia, the world’s largest producer of oil and the de facto head of OPEC, may raise prices for Asia in January for its Arab Light crude, also has lifted bullishness within the crude complex that demand for oil remains healthy.

However, worries about the near-term demand, in the face of the new variant is expected to continue to weigh on markets.

“It’s been a week since the sudden plunge of the oil price and the oil trading environment is not out of the tunnel just yet, but overall positivity today is helping Brent prices to a $72 per barrel, despite the still unquantified risks from the Omicron variant,” wrote Louise Dickson, senior oil markets analyst at Rystad Energy, in a daily note.

Dickson said that OPEC+’s decision to technically keep its meeting “in session,” until the next scheduled gathering on Jan. 4, delivers an upbeat message about the demand prospects for oil, even though the cartel’s decision to hold its output policy, and eventually raise it next year, could be interpreted as bearish for prices.

Read: OPEC+ takes unusual tack by keeping existing production policy and leaving its meeting ‘in session’

“The relatively quick decision to go ahead with a planned supply increase with modifications is not what the market was pricing in, with OPEC+ pointing to the still unknown impacts and severity of omicron, pending more detailed guidance from vaccine manufacturers and the World Health Organization,” the analyst wrote.

Against that backdrop, West Texas Intermediate crude for January delivery
CLF22,
+2.84%

CL00,
+2.84%
 was trading $1.82, or 2.7%, higher at $68.32 a barrel on the New York Mercantile Exchange, following a 1.4% gain on Thursday.

Meanwhile, February Brent crude
BRNG22,
+2.90%

BRN00,
+2.90%,
 the global benchmark, was trading $1.87, or 2.7%, to reach $71.55 a barrel on ICE Futures Europe, following a 1.2% advance in the prior session.

For the week, WTI is set for a weekly gain of 0.2% and Brent was on track for a slightly weekly decline of 0.1%.

“In essence, a secular decline in inflation has mitigated the need for monetary policy makers to lift official interest rates as much as previous business cycles,” said Joe LaVorgna, the chief economist of the Americas for Natixis Corporate and Investment Banking, who also was chief economist for the White House National Economic Council in the latter days of the Trump administration.

Markets have learned. Measured by five-year overnight index swaps, traders expect the next rate hike cycle to peak at just 1.45%. And adjusted for inflation, real rates are forecast not to get into positive territory in this business cycle.

LaVorgna said markets may be in store for a rude awakening. “But unprecedented fiscal and monetary stimulus since COVID may have reversed the post-1980s secular downtrend in inflation. If this is the case, then the real fed-funds rate eventually needs to get back into positive territory to dampen inflationary pressure,” he said.

LaVorgna said the bond market isn’t yet prepared. And to MarketWatch, he said neither is the stock market. The end result for equities? “Eventually a serious compression in multiples,” he said in an email. The last reading for the Shiller price-to-equty ratio was a staggering 39.

Related: Charlie Munger says the market is ‘crazier’ than late 1990s

The buzz

The nonfarm payrolls report has arrived with less fanfare than normal after a week of Fedtalk and of course nonstop discussion of the omicron variant of coronavirus. Expectations are the Labor Department will report a 573,000 gain in nonfarm payrolls for November, with the unemployment rate ticking down to 4.5%.

The Gauteng province of South Africa is expected to be declared to be in a fourth wave of coronavirus infections on Friday, as cases there have surged due to the omicron variant.

A late-night U.S. Senate vote prevented the government from shutting down.

Strategists at Citi moved their global equities stance to neutral and reduced their U.S. overweight stance by a notch, citing the more hawkish Fed and the omicron uncertainty. Strategists at Barclays set an S&P 500
SPX
price target of 4,800 — about 5% above current levels — as they expect earnings growth to continue, but warn “persistent supply-chain woes, reversal of goods consumption to trend and China hard-landing are key tail risks.”

Chinese ride-hailing giant Didi Global
DIDI
said it’s going to delist from Intercontinental Exchange’s
ICE
New York Stock Exchange, bowing to pressure from the Chinese government.

Electronic-signature company DocuSign
DOCU
plunged 30% in after-hours trade, as the company’s chief executive said the pandemic boom wore off.

Marvell Technology
MRVL
shares rallied, after the chip maker’s results and outlook topped Wall Street estimates.

Zillow
Z
said it’s progressing quickly with the winding down of its home-buying operation, and will purchase $750 million of its own stock.

The market

After a strong 612-point recovery for the Dow Jones Industrial Average
DJIA
on Thursday, U.S. stock futures
ES00

NQ00
traded lower before the payrolls report.

The yield on the 10-year Treasury
BX:TMUBMUSD10Y
was 1.43%.

Today’s tickers

As of 6 a.m. Eastern, here are today’s most popular tickers on MarketWatch.

Ticker	Name
TSLA	Tesla
AMC	AMC Entertainment
GME	GameStop
DXY	U.S. dollar index
BX:TMUBMUSD10Y	U.S. 10 year Treasury note
DJIA	Dow Jones Industrial Average
NIO	NIO
ES00	E-mini S&P 500 futures contract
GRAB	Grab Holdings
AAPL	Apple

Random reads

How scientists can update their COVID-19 vaccines for omicron.

Antarctica is about to experience nighttime — for all of two minutes.

A wedding ring lost in a potato patch is found, 50 years later.

Want more for the day ahead? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch writers.

Listen to the Best New Ideas in Money podcast.

Researchers say investing in so-called “momentum” stocks — which means buying the stocks that have already risen in the expectation that they will keep doing so — is the best documented and most durable “edge” in the market.

What does the news mean for your wallet? Sign up for Personal Finance Daily to find out

Its success “is a well-established empirical fact,” and can be demonstrated across multiple assets and over 212 years of stock market data argues money manager Cliff Asness and his colleagues. It is “the premier market anomaly,” writes analyst Gary Antonacci. It trounces a simple “buy and hold” stock market strategy going back almost 100 hundreds, estimates money manager Meb Faber.

And, crucially, it is the only one of the so-called factors that seems to be getting stronger, not weaker. So, at least, argue Simon Smith of the Federal Reserve and Allan Timmermann, a finance chair at UC San Diego. While investing in cheap “value” stocks and in small-company stocks has failed to produce the promised superior returns in recent years or decades, momentum has been getting better.

Over the past five years, for example, the iShares MSCI USA Momentum Factor ETF
MTUM,
+1.67%
has outperformed the SPDR S&P 500 ETF Trust
SPY,
+1.53%
by a clear 30 percentage points, and the iShares International Momentum Factor ETF
IMTM,
+1.40%
the Vanguard FTSE Developed Markets ETF
VEA,
+1.40%
by 12 points. During the turmoil of the Covid crisis since March 2020, you’ve made way more money just riding hot “momentum” stocks like Tesla
TSLA,
-0.95%,
Amazon
AMZN,
-0.18%,
Microsoft
MSFT,
-0.18%,
Google
GOOG,
+1.52%
and Apple
AAPL,
-0.61%
than you did just sticking with the S&P 500.

So is that it? Just buy a “momentum” fund and forget about it?

Not so fast. Never mind that momentum investing has actually trailed the market so far this year. Or that momentum stocks were badly whipsawed in market turmoil a year ago.

Most important: You may be able to do better.

So estimates Joachim Klement, a trustee of the CFA Institute Research Foundation and chief strategist at Liberum in London. Since early in the crisis last year he has been running a more sophisticated momentum stock portfolio. It has managed to beat straight momentum, with less risk.

Klement’s so-called “Invincibles” portfolio consists of stocks that simultaneously show positive momentum over multiple periods, not just one or two. These are stocks that have risen over the past month, and over the previous two, five and 11 months. Academic research has strong outperformance for stocks showing “overlapping” momentum over multiple periods. Klement updates the portfolio for clients monthly.

So this portfolio has, for example, produced almost twice the returns of MSCI USA Momentum so far this year, rising 33% against 17% for USA Momentum (and 25% for the S&P 500). And that’s even after allowing for huge theoretical trading costs — 1% every time you buy a stock and 1% every time you sell it. In the U.K. the outperformance has been even bigger — because, Klement argues, there he has included small and medium sized stocks and not just big companies. The momentum effect seems stronger among smaller and midsize stocks.

Astonishingly, since May of last year the Invincibles portfolio has had just one negative month.

And there is an inbuilt cautious bias to this portfolio as well, because it only holds stocks that have positive trailing returns. In a bear market you may be invested in nothing whatsoever. As Meb Faber and others have pointed out, momentum strategies can help you avoid the worst market turmoil.

Klement’s latest Invincibles list for the U.S. includes about 100 of the S&P 500 stocks, from Ford
F,
+1.48%,
General Motors
GM,
+5.10%
and Tesla
TSLA,
-0.95%
to Chevron
CVX,
+2.71%,
Boston Properties
BXP,
+4.93%,
Home Depot
HD,
+1.84%,
Lowe’s
LOW,
+2.06%,
PepsiCo
PEP,
+0.96%,
Amazon, timber company Weyerhauser
WY,
+2.78%
and restaurant chain Darden
DRI,
+4.68%.

One of the most interesting aspects of this portfolio though is not only that it has a lot of hard numbers backing it up, but that it is in theory accessible to any ordinary investor who can screen stocks by monthly performance.

My biggest problem with “momentum” as an investment strategy is that you are basically abandoning any attempt to do your own fundamental analysis whatsoever. It feels to me like the stock market equivalent of “social” media, jumping on the latest crowd mania regardless of any merits. 

But maybe that’s why I should do it. If Rome is falling, and the Dark Ages are coming, shouldn’t I just give up and bet on the Vandals?

The Russell 2000 index
RUT,
+2.74%
gained 2.7% to finish at 2,206.33, a day after hitting its first correction since June 2020.

What’s driving the markets?

After several days of volatile action, major indexes logged positive closes for the first time in three sessions on Thursday. Gains were driven by hopes that the omicron variant of the coronavirus that causes COVID-19 will prove less deadly, even if more transmissible, and less disruptive for the global economy.

Investors learned of a second U.S. case of the omicron variant from a Minnesota resident visiting New York, who reportedly showed mild symptoms.

The U.S. economy swings squarely into focus on Friday, with November nonfarm payrolls that are expected to show 573,000 new jobs created, up slightly from 531,000 the prior month, according to economists polled by The Wall Street Journal. Those numbers are due at 8:30 a.m. Eastern Time, alongside the unemployment rate and average hourly earnings.

The data have become even more important after the Fed’s Powell this week spoke of a strong economy and the prospect of a quicker taper, which could speed up interest-rate hikes.

“If the virus news ticker stays quiet, a higher U.S. nonfarm payrolls print could see equity gains capped, with a slightly lower or on target print of 550K, not enough to entirely remove faster Fed-taper fears,” said Jeffrey Halley, senior market analyst at Oanda, in a note to clients.

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Investors will also hear from St. Louis Fed President James Bullard at 9:15 a.m. Eastern Time, with the Institute for Supply Management’s services index for November, October factory orders and a revision to core capital goods all due at 10 a.m. Eastern.

While markets bounced Thursday, volatility remains high, said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note to clients.

“That’s a sign that the stress in the market is not over just yet, because the root cause of the latest market selloff is not only omicron, it’s also the fear of seeing the markets left with less Federal Reserve support due to Fed’s willingness to address the high inflation issue moving forward. And, that remains a major downside risk to the risky assets,” said Ozkardeskaya.

Shares of Chinese companies may be in focus on Friday, after Chinese ride-hailing giant Didi Global
DIDI,
-0.13%
said late Thursday it will delist from the New York Stock Exchange, following pressure from the Chinese government. Shares of Didi rose 9% in premarket trading.

Among other assets, oil prices continued to rise, with West Texas Intermedicate crude
CL00,
+2.57%
up 2.5% to $68.14 a barrel, and global benchmark Brent
BRN00,
+2.60%
rising 2.3% to $71.28 a barrel.

On Thursday, the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, decided to rollover their existing production policy and boost output at the start of next year, even amid concerns the omicron variant could hurt demand.