Looking at the latest economic data reveals V-shaped recoveries in many goods-based indicators; while services has more catch-up to do.
Hope is high that economic growth will accelerate as more people are vaccinated against COVID-19, but so far economic data has been lackluster. Meanwhile, bond investors are expecting inflation despite signs that the economic recovery’s momentum may be stalling. Why does everything seem so disconnected?
As quickly as it soared to the moon, GameStop came back down to earth; but the lessons learned are key to turning day trading speculators into longer-term investors.
As expected, the Fed kept rates unchanged; but did make clear its view that vaccines are key to the trajectory of the economic recovery.
As a review of the year that was, today’s report analyzes and dissects the nature of the K-shaped recovery in both the economy and stock market.
U.S. stocks have continued to climb amid optimism about a vaccine-led economic recovery, but it’s a narrow path—buoyant investor sentiment could easily be deflated by bad news. Although global economic growth has struggled, an acceleration in vaccinations in major countries could support stronger growth in the second quarter.
Last week was shocking and extraordinarily sad; and as if Americans didn’t have enough with which to contend, it was capped off by a weaker-than-expected December jobs report.
As expected, the Federal Reserve’s Federal Open Market Committee (FOMC) voted unanimously to keep the federal funds target rate in a range of zero to 0.25%; where it’s been since March. A majority of FOMC officials maintained their forecast that the rate would be kept near zero at least through 2023.
September 2 was a momentous day on several fronts. It was the initial pop to all-time highs for both the S&P 500 and NASDAQ; after an impressive run from the March 23 pandemic low. It was also a turning point in terms of market leadership; reflecting budding optimism about a turn-for-the-better in economic data.
Encouraging news about COVID-19 vaccines has boosted hope for stronger economic growth, kicking off a rotation in stocks and equity sectors as investors look to a brighter future. However, near-term volatility is possible, as we’re not yet out of the coronavirus tunnel.
This week’s report will look at last week’s market moves in the wake of positive vaccine news (with additional and even better news today); but will also review our most recent tactical recommendation change.
Actual third-quarter earnings may be less important than what business leaders say about their expectations.
The Fed did not add to this week’s uncertainties and kept rates unchanged, while also providing no new information with regard to its balance sheet.
For the third time since the COVID bear ended its short havoc, U.S. stocks went into pullback mode—culminating in the worst week since March. The virus itself continues to be a culprit; with another surge in cases and hospitalizations; although not for deaths, at least not yet. The lack of a fiscal relief package and heightened election uncertainty are also to blame.
Investor sentiment is telling a mixed story about the market’s ascent since the March low; begging the question, will the skeptics converge with the optimists?
With investors already on edge regarding election uncertainty, an “October surprise” arrives yet again. Can history provide some guidance on how elections impact markets?
As of this writing, it’s a rough start to the week for U.S. equities. Major indices attempted to find more stable ground last week, but volatility risks persist and the bears are winning the latest round. Policy risks abound—not just election-related, but both monetary and fiscal policy as well.
Fed maintained rates at near-zero, while also updating its summary of economic projections; now expecting a shallower economic contraction, but a slower recovery thereafter.
The U.S. stock market hit pause in early September, as investors took a harder look at market overconcentration and frothy sentiment. Meanwhile, global economies may be entering a new phase, and the Federal Reserve’s newly announced inflation policy is likely to keep U.S. rates lower for longer.
Rotation away from the market’s prior momentum darlings continues. Friday’s jobs report had bullets for both the optimists’ and pessimists’ case studies. And improving productivity, partly due to work-from-home trends, could persist as a positive economic driver.
In a speedy round-trip, the S&P 500 hit an all-time high last week; meaning the rally since March is now an “official” bull market.
Although certain high-frequency data haven’t improved markedly, the threat of the virus has started to recede.
The July labor market report had talking points for both the economic bulls and bears; with Congress on the hot seat to keep the recovery from faltering.
The Fed left rates unchanged near-zero, as expected, while emphasizing that “the path of the economy will depend significantly on the course of the virus.”
Earnings have so far bested an extremely low bar, but stocks may be discounting too swift a recovery; while concentration remains a risk.
U.S. stocks have been fairly resilient lately, even as coronavirus hotspots flare up around the country. Although consumers and businesses are increasingly worried about rolling shutdowns, major stock indexes generally have moved sideways. How long can this continue? Much depends on the shape of the economic recovery.
Rate of change and inflection points in economic data drive stocks; but in these unique times, the level of said data needs to be considered, too.
COVID-19 headlines dominated equity market action last week, with the S&P 500 suffering a near-3% decline; although all is not grim. The number of virus cases has been spiking in states that opened earliest—including my new home state of Florida, which went from a mid-60s average age for confirmed cases to the current mid-30s average age.
Why did stocks rise over the past month despite grim economic news? The Federal Reserve’s massive liquidity injection is one reason.
As expected, the Federal Reserve kept rates unchanged at 0-0.25% and said it will keep them near zero through at least 2022, in a unanimous vote.
The dominant question we’ve been getting from investors is about the perceived disconnect between what’s happening on Main Street and what’s happening on Wall Street.
On a day that started with good news on an experimental COVID-19 vaccine, with the stock market showing strong early gains, today’s report is more visual and less wordy than normal. Since I know not every reader of these publications follows me on Twitter—where I’m constantly posting charts, tables and data that I find compelling...
Both the bear market and subsequent rally have occurred at warp speed; yet the economic recovery may be disappointing to what the market’s now “priced in.”
The FOMC restated its commitment to use its full range of tools to support the virus-crippled economy and keep markets functioning smoothly.
Stocks and earnings don’t always move in tandem; with stocks typically leading earnings … but is the market’s rally too much, too soon?
The COVID-19 pandemic has severely affected the U.S. economy, with containment efforts leading to widespread business closings and surging unemployment—and stock market volatility. The key questions now are when can the economy reopen, and what happens when it does?
Labor market data has never looked as ugly, with more hits to come; but many are looking ahead at what an eventual recovery will look like.
We know a lot more about COVID-19 than we did a few weeks ago; but there remain questions that are unanswerable at this stage. We don’t know how much worse this gets before it starts to get better...
Stocks have plummeted this month as investors struggled to assess what impact the COVID-19 coronavirus may have on the economy.
In the easiest of times (are they ever, really?) it’s futile to make predictions about the market with any semblance of accuracy. Clearly, these are not the easiest of times; so the futility is magnified. Even with non-stop coverage of COVID-19; with every question answered, there’s another question to ask.
The impact of the coronavirus is spreading; both geographically and economically. Central banks will likely step in; but supply shocks are difficult to combat.
Although stocks rebounded after a sharp drop in January, the market’s reaction to the coronavirus outbreak highlighted stock vulnerabilities.
Friday’s jobs report, as well as other recent labor market data, has an “on the one hand; on the other hand” flavor to it.
As expected, a long and strong move up in stocks attracts more and more believers and adherents, which can stretch sentiment to extremes, like now.
The U.S. economy split sharply in 2019—manufacturing activity lagged services, corporate profits lagged stock performance—while investor sentiment surged. How long will these divergences continue in 2020?
For nearly three years we’ve been tactically recommending overweighting large caps (S&P 500) and underweighting small caps (Russell 2000)—time for an update.
Next year is set to start on a high note, with consumers and the Fed keeping the economy and market afloat; but risks remain elevated, including trade and elections.
The Federal Reserve left interest rates unchanged, as expected; while signaling rates would stay in their current range through next year.
