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 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 29, 2020 – Stocks continued their extended rally in the morning but gave back all the gains by the close. Recent leaders, like Amazon and Netflix, gave up the most ground. Yesterday was a day for the beaten down stocks to rally and many did. It is unlikely, however, that retailers, energy companies, and banks are going to sustain market leadership for very long, given all the virus-related uncertainties surrounding them.
It is hard to explain why stocks are now within 10-15% of their all-time highs set in February. Then again, looking back, it is hard to explain why stocks were at their all-time highs in February while Covid-19 was already lurking on both of our coasts. Those of you who have followed my writings over …
April 27, 2020 – The sustained gain in stocks over the past three weeks reflects some combination of central bank action, and a belief that the worst reaction to Covid-19 is behind us. Over the next several months there is hope for positive therapeutic results that could help reduce mortality fears. Should those hopes be realized, the rate of recovery could be swifter than many now expect.
Stocks rose in the final half hour on Friday, closing out three straight days of gains. For the week, stocks were marginally lower. Earnings news for the week was uneven and confusing. First quarter results were heavily impacted negatively by the last two weeks of March as most of the nation went on lockdown. Second …
April 24, 2020 – The success, or failure, of the States reopening will be critical in determining which way the markets move over the coming weeks. Earnings reports have been as expected, horrible. The market has discounted that already. Money printing is great kindling but consumers have to feel safe to go out and spend
Job losses continue to pile up with another 4.4 million unemployment claims filed yesterday. That brings our total to 26 million in five weeks. The good news is that this was the lowest number in a month. The bad news is we now have almost 45 million in total when combined with Europe. We have …
April 22, 2020 – While the economic and virus news remains disturbing, we are at the cusp of reopening the economy in some fashion. None of us know the consequences. We will learn from early states like Georgia and South Carolina. Others will tread slowly. A month from now, we should learn a lot more. Economically, reopening is becoming a necessity. Life won’t be the same. That much is certain.
Stocks fell sharply for the second day in a row, reversing recent trends. Investors who enjoyed the two week rally now have to revert to defense once again. While several states are at the cusp of reopening their economies, the news front is decidedly mixed. That will certainly add to volatility over the next several …
April 20, 2020 – Money flows are helping stocks move higher while bad Covid-19 related news push prices lower. This process is likely to continue for some time. Over the next few weeks some areas will begin to reopen. While the reopening won’t be universal, we will all be able to get a glimpse at the pace of recovery. It is likely to be slow.
Stocks rallied on Friday on hopes that news of a possible drug therapy for Covid-19 would ease fears and open up the economy quicker. Any steps toward a better treatment should be viewed positively. But any treatment is still months away. Most treatments tested to date are just that, treatments, not cures. They are targeted …
April 17, 2020 – The battle between money printing and horrible economic data is ongoing. Winners and losers are showing wide divergences. A broader market rally, like today’s, is critical if we are to keep going. The faster we open back up, the better. Positive drug trial news is equally important.
The recent monthly economic releases have been as expected, horrendous; unless you focus on grocery stores, whose sales rose 26% last month. The free fall in many data sets are showing more records, all to the downside. These are March numbers where a lot of the economy was still open. April is sure to be …
April 15, 2020 – When interest rates fall, P/Es rise. That’s the natural offset. In times of uncertainty, investors seek maximum security. In equity markets, that means they gravitate to market leaders with great balance sheets and secure growth prospects. There will be time to sift through the fallen angels but now isn’t the moment.
April 15. It takes a pandemic to defer taxes for 90 days! Yesterday, stocks rallied once again as many puzzled why stocks are rising while Covid-19 cases set new records. But the notion that states are starting to coordinate plans to reopen economies seems to be enough to attract new money. It isn’t just the …
April 13, 2020 – Stock prices rose dramatically last week, despite extremely bad economic news. The reason? Stock prices are forward-looking and there is rising confidence in the outlook 6-12 months from now.
Stocks rose about 1% on Friday capping the best week for equities since 1974. The economic news certainly wasn’t the driver. Over the past three weeks over 15 million Americans have filed for unemployment. The unemployment rate for April is likely to exceed 15% and could rise above 20%. Second quarter GDP will almost certainly …
April 8, 2020 – Markets have been celebrating a possible peak in Covid-19 cases and the possibility that our world can reopen soon. While we don’t know exactly how it will reopen or whether the virus can be contained once we all reemerge, we are hopeful that the worst is upon us now. Life can only get better. But the sober reality is that once we go outside again, we will see the extent of the damage already done. The Recovery Phase is filled with unknowns, and from here forward progress is likely to remain volatile until there is greater clarity.
Stocks soared yesterday morning following Monday’s big gains. You know investor behavior changes when stocks rally on a Monday. But the rise was too far, too fast, and by the end of the session all the gains had disappeared. The news this week has been an apparent flattening of the virus’s curve as the number …
April 6, 2020 – Markets continue to trade sideways in a very volatile fashion as we approach the apex of the Covid-19 curve, probably within the next two weeks. When the economy can restart now comes more into focus for investors. How that reopening evolves will shape market performance over the coming weeks and months.
Stocks fell Friday, erasing almost all of Thursday’s gains. Since the late March low, stocks have been moving sideways in a rather volatile, spastic fashion reacting daily to the coronavirus events. But while the day-to-day numbers of infections and deaths continue to rise steadily, they have done so largely in line with recent forecasts. As …
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 …