Stocks continued to rise to record levels last week after a clearer path was laid out by the Federal Reserve. In a shift from previous statements, chairman Jerome Powell said the Fed would be more accommodative and let inflation and employment run at higher rates that will likely accompany lower interest rates. The statement came as unemployment benefits dropped, signaling the labor market is recovering. President Trump officially accepted the GOP nomination on Thursday. His speech at the White … View More
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The perceived disconnect between the strength in equity markets vs. the current standing of the economy remains – without hesitation – the primary source of anxiety among investors. We continue to think about this a little bit differently than the consensus… specifically, the quiet leadership from the more cyclical corners of the market may be more suggestive of a positive economic surprise in the months ahead. Consumer Discretionary vs. Consumer Staples (equally weighted), is on the cusp … View More
Last week, equities were positive as value names led the way. The S&P 500 index was up 0.69% while the S&P 500 Value index was up 0.91% and the S&P 500 Growth index returned 0.55%. Top performers in the S&P 500 index were cruise providers Royal Caribbean Cruises LTD and Norwegian Cruise Line Holdings along with gaming/hotel titans Wynn Resorts LTD and MGM Resorts International. These names benefitted from the 7-day average positive COVID19 tests falling to 54,503 on Friday, down … View More
Markets continue to rally while some benefits will continue to assist Americans hurt by the Coronavirus
Equities continued to move higher amid uncertainty around an extension of unemployment benefits and continued tensions with China. As of the close of markets on Friday, an agreement between the House Democrats and Senate Republicans on a new round of federal stimulus is still trillions apart. On Saturday after negotiations failed to yield any results, President Trump followed through on his promise to issue executive orders after the collapse of stimulus negotiations with Democrats by: 1) Alloc… View More
Market rallies last week as earnings come in strong. Record Plunge in US GDP aligns with the rest of the world.
Last week, equities were positive as mega-cap technology stocks led the way with a slew of strong quarterly earnings announcements. The S&P 500 index rallied 1.5% while the Nasdaq Composite index was up 3.5%. Looking ahead to next week, Bloomberg expects 133 names in the S&P 500 index to announce quarterly results. As earnings season continues, equity markets look to learn more about how much COVID shutdowns are harming U.S. companies. U.S. real GDP plunged in 2Q, falling at a post-war… View More
Stock Market down slightly for the first time in three weeks. Oil moving higher with increased demand.
The S&P 500 Index declined 27 basis points last week after three straight weeks of gains. The index is currently up 3.82% in July which has helped push it back into positive territory for 2020 after the February-March steep market decline. Equities were up early in the week, but reversed course on Thursday with information technology, consumer discretionary, and communication services being the hardest hit sectors. Negative jobs data, along with increasing COVID-19 cases causing a decline in… View More
For the first time ever, could raising taxes be a winning campaign strategy in 2020? Earnings coming in as expected with few surprises
As we get closer to the election, the political landscape is heating up. President Trump is defending his administration's handling of Covid-19 and focusing on how strong the economy was pre-COVID-19 as well as how it's recovering post-COVID-19. Joe Biden is sharing his plans for sweeping reforms in Energy, Healthcare, and Education. In order for Biden to implement the changes he is outlining, he will have to raise taxes across the board. Given the state of the economy, it's interesting to be s… View More
New Covid-19 cases higher... Market continues higher waiting for Q2 earnings…are higher taxes really a winning strategy?
A recurring question we hear is, "How can the market continue to move higher with all of the new documented cases of Covid-19?" We believe currently available data provides valuable insight into why stocks may keep pushing higher, suggesting we may be able to balance the scales between health risks and economic risks. The first and second chart highlight that despite the increase in daily reported cases of Covid-19, the death rate has continued to drop. Chart 1: Further, the data shows us t… View More
The economy is mending better than expected with strong June Jobs report and expansion in Manufacturing back on track
From depressed levels from the Corona virus, we are continuing to see some very large economic growth rates. The manufacturing PMI returned to expansion territory in the U.S., rising to 52.6 in June with a surge m/m in the new orders component (a leading indicator). The Conf Board survey of consumer confidence rose to 98.1 in June, with increases m/m in both the present situation & expectations components. The present situation survey reflects recent improvements in the U.S. labor market. Th… View More
While local lockdowns remain concerns (for example TX & FL), a renewed national/global restriction due to the virus is not the base case. So, from depressed levels, we are seeing some very large economic growth rates. Global PMI measures continued to bounce in June. U.S. new home sales rose +16.6% m/m in May. Durables orders increased +15.8% m/m. The NY Fed’s tracking index of weekly data continues to turn up. U.S. consumer spending cuts look to have occurred at the upper-end of the inco… View More