Perspectives

Europe appears to be in the midst of an economic double-dip, with new COVID-19 lockdowns slowing economic activity. With the virus controlled, China continues to expand. With the virus not controlled, the U.S. continues to expand. The concern in the U.S. is that activity & mobility have become too quick for virus control (especially heading into the winter holidays). We continue to deal with a non-linear series. With a tested vaccine being produced now, U.S. policymakers are feeling pressure… View More

While the election is still not certified, and court battles will drag on, it appears that we can draw two firm conclusions from the 2020 election. First, the pollsters were wrong again. Secondly, American voters do not want a radical shift in economic policy. Although the states have not yet formally certified their election results, statistical evidence compiled by the media strongly favors Biden winning. Until the votes are certified, there remains some ambiguity; recounts will be automatic … View More

We have been asked many times and in many different ways what our thoughts were on the election over the last few months. We must tell you, we look at this purely through an economic lens. There are many social issues that come and go as time moves forward, but our job is to understand the economy and that is what we like to focus on. For months we have been saying the markets are usually what we look at in trying to understand the elections. However, because of the Coronavirus, it has been muc… View More

The S&P 500 posted its worst weekly return since March due to a risk-off tone as we enter election week. Mega cap technology underwhelmed high expectations, and COVID-19 cases hit new highs across the U.S. and Europe. The five largest technology firms, which account for over 20% of the S&P 500’s weight, reported mostly disappointing results. While big technology came in ahead of consensus estimates, marginal beats and disappointing future guidance weighed across the sector. Apple Inc. … View More

With all the uncertainty going on in the world, we have found more stability in looking at the reported economic data. One of the data points that we believe is crucial is personal income. We have shared many times over the years that the US economy is a consumer led economy; roughly 70% is driven by consumption. The most recent report of personal income shows that it increased 0.9% in September (+1.6% including revisions to prior months), which beat consensus expectations (again). Consensus exp… View More

To reiterate, this Thursday morning we expect the government to report a HUGE and VIRTUALLY UNPRECEDENTED surge of at least 33.4% annualized growth rate in real GDP growth for the third quarter. There are still a few monthly reports due this week that could affect our forecast, but only slightly. Obviously, the US will not keep growing at this rate, but the question remains about how much might it slow? Believe it or not, because we have September data – the "jumping off point" for the four… View More

The equally-weighted Value Line Index (roughly 1700 issues) is right on the cusp of breaking out to multi-year highs, following consecutive declines of roughly -25% and -45% over the last 2+ years. This is about as good of an indication we have that participation is broadening under the surface. The recent outperformance from small-caps, trading to 5-month relative highs last week, is also suggestive of this positive shift. Continued improvement from credit – BB vs. BBB corporate spreads hit r… View More

There is nothing normal about the 2020 recession. Massive nationwide shutdowns of "non-essential" businesses caused real GDP to drop at a 31.4% annual rate in the second quarter, the biggest drop since the 1930s. However, as we expected, a V-shaped recovery is being traced out. On October 29th, in ten days, we expect a report that says third-quarter real GDP rebounded at a 33.4% annual rate. We may make some minor adjustments to this forecast when new reports on business investment, inventorie… View More

The S&P 500 Index returned 3.89% last week, its best performance since the shortened holiday week ending July 2. October has shown a welcoming start for equity investors following a disappointing September. After recording an all-time closing high on September 2, the index slid over a three-week period posting a -3.80% return for the month, its first negative monthly performance since March. Equities opened up on Monday on news that President Trump was recovering from coronavirus symptoms an… View More

It felt like we packed a month worth of economic happenings into just one week. The first presidential debate, Supreme Court nomination, employment data continues to get better and many of our countries political leaders, including the President, contract the Coronavirus. Despite President Trump testing positive for coronavirus, equities ended a volatility week higher as investors became more upbeat about a potential stimulus package. While the positive test for the President creates near term u… View More