All the leading equity indices rose Friday but that hardly defined the market. Huge gains by both Apple# and Facebook# dominated weakness in cyclical issues. The Dow rose by more than 100 points, but without Apple it would have declined by well over 100 points. Thursday evening, after the market closed, Apple, Facebook, Amazon and …
July 31, 2020 -Big tech got even bigger last night after reporting blowout earnings. The new digital economy is not slowing down. However, there were many other important data points for the market to digest as we enter the last day of a solid July for equity investors.
There is a lot to report from the past few days. Some backward looking, some forward. Some good, some bad. We have a historic GDP report, Fed comments, Big-Tech quarterly earnings and another shoddy unemployment claims report. A lot to chew on, as usual. Let’s start with the old news. GDP, on an annualized basis, …
July 29, 2020 – The Fed concludes its two-day FOMC meeting today. Key is how it plans to provide further stimulus to the economy. One tool being considered is to control interest rates all along the curve. It is a powerful tool with both positive and negative long term consequences.
Stocks gave ground yesterday amid a mixture of good and bad earnings reports. In the absolute, earnings were down across the Board. But the Q2 declines had been priced in. What matters always during earnings season is performance relative to expectations. Managements had been guiding analysts for the worst. As a result, bad earnings were …
July 27, 2020 – While newspaper headlines suggest a virus out of control across the Sunbelt, data suggests the recent spike may be ending. But it isn’t receding. Economic growth rates are likely to slow down from here. Markets are headed into a transition window as both Congress and the Fed offer more support. The election will also come into more focus once earnings season ends and Conventions begin.
Stocks fell last week after three straight weeks of gains. Persistent Covid-19 eruptions added fuel to the decline. But the signature move last week was stepped up profit taking among the high profile tech companies. Netflix and Microsoft# both reported fine earnings, and yet their stocks tumbled, bringing most of the other tech names down …
July 2020 Economic Update – Looking Ahead in a Diseased World
As the COVID-19 pandemic continues to impact the global economy, distinct winners and losers are emerging as various geographies reopen around the world. In this video, our Chief Investment Officer, Jim Meyer, provides insight regarding the Haves, the Have-nots, and those in between.
July 2020 Economic Update – Looking Ahead in a Diseased WorldRead More
July 24, 2020 – New COVID-19 cases have been dominating the news cycle again. Vaccine possibility started reporting data in the past couple of weeks, generating excitement. News about possible treatments has been sparse to say the least.
Jim Vogt is on vacation and hopefully enjoying his well-deserved time off. There have been plenty of recent headlines regarding the Coronavirus (COVID-19) that have moved the market. Let’s dig a little deeper to see where we currently stand, not only with the virus but with possible vaccines and treatments that may help curb the …
July 22, 2020 – The FANG names are starting to look a bit tired as they move sideways in volatile fashion with setting new highs. Expectations are high. We will find out as earnings season rolls along whether those expectations are justified
Stocks gained again yesterday. But it was the cyclicals that took over leadership as the tech stocks took a breather. Few of the big name tech leadership companies have set new highs in recent days, perhaps a sign that they are about to enter a consolidation phase. With earnings season now upon us, it will …
July 20, 2020 – In the stock market, the success of the haves matters more than the weakness of the have-nots. Valuation matters, and as everyone piles into the winners, having discipline has never been more important.
Stocks were mixed on Friday, a slow typical end of a summer week. Earnings season started last week with the banks. No real surprises. It gets underway in earnest this week. Of course, Covid-19 continues to be the big story overhanging the market. It remains a “Tale of Two Cities”. In the South, cases continue …
July 17, 2020 – There are now 3 distinct groups of stocks. The group of leaders faces a sudden pause this week that may be a precursor to a decent correction. Presidential news flow is sure to ramp up over the coming weeks as Biden picks his running mate and debates are must see TV.
Another rotation is underway as FANGMAN peaked early on Monday. That cohort has already declined about 5%+ this week, with profit taking in extended names taking hold. Netflix reported Q2 earnings yesterday, showing “only” 25% revenue growth and earnings per share that nearly tripled from last year. The stock is down 8% premarket. Their bull …
July 15, 2020 – Those in the South are learning the lessons that New Yorkers learned last spring. As hospitalizations and death tolls rise, they will gain respect for Covid-19 and the curve will flatten again. That is the market’s message. At the same time, we learned Monday that if all the money flows into one small group of stocks, you don’t want to be the last buyer. Thin markets are susceptible to mini-flash crashes. Monday was a warning that must be heeded.
Stocks moved up sharply once again yesterday despite bad news related to Covid-19. More on that in a moment. On Monday, there was a mini-flash crash within the high flying tech sector. In a matter of hours, several stocks that had gone almost parabolic in recent weeks, like Tesla, fell by as much as 20%. …
July 13, 2020 – The market keeps rising, but the increase in Covid-19 cases is starting to slow the pace of recovery. If that continues, the risk to a market going to new highs will increase.
Stocks continued to rise on Friday. Leadership this time was in the risk-on stocks, those most affected by Covid-19, as hopes for improved medical treatments sparked the rally. While any news of better treatments is good news, the number of new cases continues to spike. The skew toward younger Americans and more effective treatments has …
July 10, 2020 -The first half of 2020 was a wild ride. FANGMAN stocks helped keep investors close to even. Other areas are still scraping by and hoping for Covid case counts to stop rising. Earnings updates are unlikely to give investors detailed information about the future.
Rising Covid cases and a slight uptick in death counts are taking their toll on markets yet again. Overall, the major averages are being held up by a select few mega-cap leaders, but underlying constituents paint a very different story. Some of this makes sense. When growth is scarce and interest rates are low, money …
July 8, 2020 – Stocks have been in a seesaw pattern for the last month. The Fed has stopped growing its balance sheet, at least for now, and Congress is still negotiating its fourth major support package. How schools handle the reopening process will have significant bearing on the pace of recovery post-Labor Day.
Stocks fell yesterday, finishing near their lows for the session. They gave back most of Monday’s gains. The momentum from the process of continuing to open the economy was counterbalanced by fears of the impact of Covid-19 delaying or even reversing reopening. Bulls point to the declining death rates to suggest that reopening is essentially …
July 6, 2020 – Pandemics accelerate change. The winners are those that correctly adapt the quickest. The weak fall by the wayside. In the stock market, the success of the fittest means more and more money flows to the winners. Thus, a rising market doesn’t mean universal success. Those failing to adapt get left behind.
Stocks rose on Thursday to end a holiday shortened week after a surprisingly good June employment report. As states have reopened their economies, over 5 million Americans have returned to work over the past two months. That doesn’t count businesses that reopened since mid-June. Thus, further gains are likely in July. But there are still …
July 1, 2020 – Q1 was the worst quarter for the stock market in decades but ended with a rally. Q2 was one of the best quarters but ended mixed. Perhaps that ending is a harbinger for a bumpy Q3, with Covid-19 winners continuing to shine while those badly damaged by the pandemic still struggle for survival.
Stocks finished the second quarter with a solid rally. It was the best Q2 in more than two decades, following the worst Q1 over an even longer span of time. For the first half, stocks were down about 4%, although the tech heavy NASDAQ was actually up for the first half of the year. Thus, …
June 29, 2020 – Rising Covid-19 fears rocked markets of Friday. But this isn’t the second coming of New York in April. Don’t expect another collapse. Rather, markets will react to changing news flow in a volatile manner in the weeks and months ahead.
Stocks fell sharply on Friday as Covid-19 fears rose along with a spike in new cases in some of the country’s most populous states. As always, there appears to be two sides to almost all stories. The good news is that the rise in cases is much sharper than the rise in hospitalizations while the …
June 26, 2020 – A fully valued market battles with rising Covid cases and a confused consumer. Reopening efforts are paused in some areas while Government stimulus checks may already be spent by many. A summer consolidation period continues to look like a base case after a massive rally.
As expected, choppy market action continues after the massive rally off March lows runs out of steam. A combination of full valuations, rising Covid cases and a cooling in reopening data is leading to horrible action in cyclicals while the FAANG+ group keeps the market afloat. You can throw in European tariff comments, a higher …
June 24, 2020 – Stocks once again look extended after a 7-day rally. Leadership is narrowing. The foreign and retail speculators who so often are active late in a bull market are active once again. Take the time to rebalance. Don’t chase this rally.
Stocks rose yet again yesterday, although finishing below their best levels of the day. Once again, the tech sector, led by the FANG stocks plus Microsoft# and Apple#, was the front runner. Indeed, if you look at almost any stock except those within the high flying tech sector that have been hitting new highs, you …
June 22, 2020 – Stocks have begun to move sideways as concerns of an enduring first wave of Covid-19 starts to show increases in the infection rate. There are a few locations where the spread threatens to get out of control. While the locations are few, they can be precursors to others. How the spread is handled may provide clues to the economic consequences over the next several months
Stocks were mixed with a modest downside bias on Friday. As noted previously, the sharp 6%+ drop a week ago Thursday seemed to usher in a choppier environment. The euphoria evident in May and early June seems to be giving way to a more back and forth pattern. That includes rotating leadership. While some one-decision …
June 19, 2020 – Positive China trade news is boosting global markets. Much better than expected economic data has helped us recover a large chunk of last week’s massive sell-off. The future looks bright, even if valuations are at extremes. A trading range to consolidate these gains would be normal.
An unexpected report detailing China’s intent to accelerate their farm purchases in accordance with the trade deal sent global markets higher overnight. Also, China’s major shopping event yesterday, aptly labeled “618”, showed a record $136B in sales from just two websites in 24 hours. For comparison’s sake, Amazon’s online sales in the U.S. are slightly …
June 17, 2020 – Yesterday was another seesaw day in the market, this one with a happy ending. The Dow opened up 800 points, gave almost all of it back by late morning, rallied hard, but finished off its best levels of the day. Since about a week ago, volatility has returned in spades. With that said, markets have generally become directionless, moving 500-1000 points in spastic fashion before reversing.
But one cannot sit back and look without that constant reminder, “don’t fight the Fed”. The Federal Reserve is now committed to buying individual bonds. Buying ETF shares and holding them doesn’t seem as good a long-term solution as buying individual bonds and holding them to maturity. Ultimately, ETF shares would have to either be …
June 15, 2020 – Stocks rallied on Friday, but came nowhere near to erasing Thursday’s sharp losses. Bond yields continued to fall, reflecting rising concerns about the current economic strength in the U.S.
From the time states began to reopen until last week, investors were celebrating the reopening of our economy. Businesses were reopening, consumers started to wear a smile, and Americans gave signs of getting back to something close to what we can call normal. There were even steady medical breakthrough announcements toward both a vaccine and …
June 12, 2020 – A much needed correction is underway. Excessive valuations, overbought conditions, rising Covid cases and Fed commentary created a mini perfect storm to book profits. Industry leaders and long-term winners are getting back to buyable zones. However, some patience is warranted at the moment.
The inevitable pullback is finally upon us. After a 48% rise in the S&P 500 from the lows, a pause is welcome news. The market overdid it on the downside then shot too high, too fast on the upside. In total, the Dow Jones was down 1,861 points or 6.9% yesterday. The Nasdaq held up …
June 10, 2020 – The rapid recovery in stocks of companies from industries decimated by Covid-19 may have run its course. Today the focus will be on the Fed as the two-day FOMC meeting winds down. All attention will be on Jerome Powell’s comments and any indication when monetary easing might abate.
Stocks gave back some ground yesterday after last week’s strong rally. The losers yesterday were generally the big winners last week, including banks, airlines, other leisure stocks, REITs and industrials. The winners yesterday were the FANG names as the NASDAQ Composite set an all-time high. Lately there has been a push and pull between growth …
June 8, 2020 – An improving economy, low interest rates, and a Federal Reserve that is still adding to its balance sheet at a $3 trillion annual rate have combined to create another surge in the stock market. While we can’t time day-to-day moves, at some point the Fed will slow its rate of bond purchases and rates will begin to rise again. Thus, the tailwinds supporting the market’s surge may start to lose strength soon.
Stocks soared on Friday after a surprisingly good May unemployment report. Who would have thought that one could describe a 13.3% unemployment rate as good, but an even higher number was expected. Actually, if you read the weekly cumulative unemployment claims instead of simply adding up the weekly totals of new claims filed, you would …
June 5, 2020 – Reopening efforts are showing positive momentum. Many green shoots are popping up. Stocks are responding globally with a massive move upwards. This has led to some overbought conditions that typically precede a consolidation, but that is fighting against the Fed.
We have seen nearly 400,000 Covid-19 deaths and 6.6 million cases globally. A large portion of the world was shut down for months. Over $10 trillion in stimulus is being implemented. Many businesses, small and large, are closed forever. Currently, the number of flights is 90% below year ago levels. Interest rates are back to …
June 3, 2020 – Stocks look to move higher as confidence builds that the economic recovery will move faster than previously expected. The Fed keeps pumping money in, keeping interest rates low. That further boosts the movement into the stock market. The focus now is sifting through the damaged goods of Covid-19, looking for bargains as companies rise from the dead. Time will distinguish between bargains and value traps.
Stocks continued to rally as confidence builds that the reopening process is going well from an economic point of view. At the same time some bond yields remain depressed. Most likely this reflects active high volume buying by the Federal Reserve, more than investor concern that the state of the economy will remain depressed for …
June 1, 2020 – May’s optimism now will have to be matched against June’s reality. All states have started to reopen. Optimism for a quick restart is high. We will know in a few weeks how valid that optimism may be. What we do know is that virus fears will hold back some recovery. We also know that businesses that have adapted to change quickly have been the most successful.
Stocks closed mixed on Friday. The strength of some cyclical names, notably the banks and industrials, faded late last week as technology names that underperformed earlier in the week regained momentum. Yields fell slightly as economic data continued to show economic weakness. As the economy starts to reopen, there are questions as to whether the …
May 29, 2020 – The market rally continues to broaden this week pushing many stocks above fair value. Fed liquidity is inflating stocks well before the goods news arrives. When stimulus measures and unemployment benefits run out, the picture becomes less bullish. However, momentum is powerful and “Don’t Fight the Fed” is the Golden Rule.
Strong moves continued this week in the have-nots as reopening efforts of the world continue to play out. This has led to some profit taking in the old winners, those who benefited from stay-at-home orders. Netflix, in particular, has lost over $40 in price over the past ten days, or 10%. It is safe to …
May 27, 2020 – The joy of reopening, combined with ongoing infusion of new capital from central banks, has stock investors euphoric. But the Fed can’t continue to buy securities at its present pace for long, and many businesses may not come all the way back quickly. While some correction might be necessary, a return to anywhere near the March lows is unlikely.
Stocks continued to surge yesterday, with the leading averages up another 2%. But who would have thought such a gain would happen while share prices for Apple#, Facebook#, Amazon, and Microsoft# all fell. The obvious answer is rotation. With economies now starting to open in all 50 states, stocks of companies in businesses virtually shut …
May 2020 Economic Update – After COVID-19
The COVID-19 pandemic continues to have a huge impact on the economy, but there are also bright spots appearing on the horizon. In this video, our Chief Investment Officer, Jim Meyer, explores the impact of the virus thus far, and offers some projections on possible recovery scenarios.
May 22, 2020 – The rally broadened out this week as retail earnings reports rolled in. Individual stock reaction was mixed. Encouraging vaccine trial data and consumers’ willingness to venture out of their homes is paramount to economic data bouncing back. Trade war rhetoric is not helping.
Futures are flat premarket but overall it has been a really solid week for investors. The rally has broadened out a bit, which is a necessary ingredient for us to get increasingly bullish. For the week, the Dow Jones and S&P 500 are up 3.3% and 2.9%, respectively, while the NASDAQ is up 2.4%. The …
May 20, 2020 – Stocks fell sharply late in yesterday’s session, after the progress Moderna announced on Monday in the development of a new Covid-19 vaccine was questioned. On Monday, stocks rose by more than 3% after the company said an early Phase I test of its proposed vaccine produced antibodies in all patients without significant safety risks. But some sophisticated scientists questioned the lack of supporting data and said they had doubts. Ergo a seesaw market once again.
Moderna may or may not have the key to the city. Only time will tell. The media loves headlines that note the creation of antibodies and the lack of warts. Scientists want to see lots of supporting data. But hey, it’s only Phase I. Even giving Moderna the benefit of the doubt, the timetable for …
May 18, 2020 – Stock market optimism coincides with an accelerated pace of reopening the economy. Within weeks, stores, restaurants, gyms and spas will restart operations albeit at a measured pace. Hopefully, summer will allow this to happen without a violent resurgence of Covid-19.
Stocks closed slightly higher Friday in a seesaw session, but still finished lower for the week. While earlier in the week it might have seemed that a serious correction was beginning, by week’s end the bulls appeared back in control. Clearly the economic data has been all bad, in some cases worse than expected. Friday …
May 15, 2020 – Volatility is creeping back after a massive rally. Positive steps are ongoing but this will be a choppy recovery. Good news has been priced in. The pace of the recovery will determine the market’s next move.
Some downside volatility has finally crept back into the market with mostly down days this week followed by a cyclical rebound yesterday. Futures are down again today as China trade war rhetoric heats up. The fiscal and monetary stimulus can only go so far (and that’s a lot) before economic data takes over. The slowness …
May 13, 2020 – As more states reopen, facts will replace speculation. We will also witness a lot of unintended consequences, some good and some not so good. Expectations will be replaced by reality. The spread between the two will govern how stocks react over the coming months.
Stocks fell sharply in late trading yesterday for no obvious reason. If the market had gone up 450 points, I could have attributed the rise to optimism about the reopening of our economy. If it went down 450 points, as it did, I could suggest the cause was concern that reopening would spread the virus. …
May 11, 2020 – As more states are getting set to reopen, investors are watching a new phase of the economic response to Covid-19. We won’t know for several weeks or even months whether we are reopening too fast or not fast enough. But we certainly will have more facts by mid-summer. Public health officials still warn of a possible spike in the fall. If that happens, markets will react. If not, April was probably the low point.
Stocks continued to move higher last week despite the worst employment report since the Great Depression. And the damage is likely to get worse. The May report will show data based on numbers to be reported this week. The unemployment rate could soar to 20% or higher in May. But stocks look ahead, and the …
May 8, 2020 – – Leaders and laggards continued to diverge this week. There is reason for optimism on some companies who have not participated in the recent rally. The new post-Covid world will look different and the stock price movement may not reflect that fully. We still have an election to ponder as well.
We start the day with an unemployment report that spiked to 14.7% with 20.5mm jobs lost in April. Futures shrugged these numbers off as we look to open solidly higher. Clearly, optimism for successful reopenings around the world and an improving chance of beating this disease is winning the day. Thursday’s market performance aside, the …
May 6, 2020 – The message of the market is that we are past the abyss. April probably saw a drop of over 20 million jobs and more will be lost in May. But the world is reopening and the stock market is showing some optimism. Recovery will be very slow, but unless there is a resurgence of the virus that forces repeat closures, the direction is forward.
Stocks rallied once again yesterday but finished well off their morning highs. The economic news continues to be poor but survey data, which is real-time, suggests that the low point was in early April, the time of maximum quarantine. As the country slowly reopens, and the emphasis is the word slowly, investors will be watching …
May 4, 2020 – Threats of new tariffs are weighing on stocks. Some profit taking was in order anyway. States are starting to reopen. Markets want to know how fast the economy might recover. They will learn a lot over the next 30-45 days.
Stocks fell sharply on Friday, partly on profit taking and partly related to yet another threat of tariffs against China by President Trump. The most recent tariff agreement puts some burden on China to accelerate the purchase of American goods, particularly agricultural products. Obviously, the current pandemic throws a monkey wrench on that commitment. Chinese …
May 1, 2020 – Stocks posted one of the better months in a while. A lot of good news has been priced in. Much work needs to be done from here. The bull story has legs but timing may be more uncertain.
Last month brought one of the strongest equity market returns in a long time, posting the best advance since 1987. Coming after we saw negative interest rates, negative oil prices and a near complete shutdown in the economy is saying something! In total, the S&P advanced 12.7% and the technology heavy NASDAQ gained 15.4%. May …
April 2020 Economic Update – Market Outlook in the Midst of the Coronavirus
Markets have continued to be highly volatile as the coronavirus situation continues to impact the physical and economic health of our country and the world. In this video, Chief Investment Officer, Jim Meyer, discusses the possible paths out of this crisis, and what it means for your portfolio. NOTE: Due to a technical issue, the …
April 2020 Economic Update – Market Outlook in the Midst of the CoronavirusRead More
March 20, 2020 – The market action is slowly showing some signs of normalcy. A handful of stocks and sectors may have hit their bottoms. Massive global money printing is providing a floor. We are hopeful there will be some cure in the coming months as new data looks promising. We are not out of the woods yet though.
The record books are being rewritten during this malaise. We’ve experienced eight straight days of at least 4% moves in the S&P that finally ended yesterday. The previous record was only six, dating all the way back to 1929. The very short end of US T-Bills turned negative out to six months at -0.02%. The …
Special March 2020 Video – Market Volatility Related to Coronavirus
Given the recent market volatility and the fears related to the coronavirus, Tower Bridge Advisors recently broadcast a special webinar providing our perspective on the current state of the markets. Please watch to hear our view on how investors should respond to the ongoing news.
Special March 2020 Video – Market Volatility Related to CoronavirusRead More
December 2019 Video: 2020 Outlook
As 2019 comes to a close, we look toward 2020, a presidential election year. In this video, Tower Bridge Advisors’ Chief Investment Officer, Jim Meyer, looks at the key factors affecting the market in the year ahead. Jim also takes a look at each of the S&P industry sectors and provides some perspective on the …