: A fifth US coronavirus relief package will be in focus this week and we may begin to see details on the GOP proposal later today. Media reports suggest the $600/week of additional federal unemployment benefits will be cut down to ~$200-400 with some form
The outperformance from value sectors (Financials, Materials and Energy) this week looks more like portfolio rebalancing than a large scale commitment to the group. Portfolio Managers were underweight Financials coming into Q2 earnings based on concerns over massive reserve builds and reserve guidance. They got
The recent outperformance in cyclical/value sectors follows better economic data (US ESI at record +270.80), some renewed vaccine optimism and expectations for a near term peak in the most recent regional hotspots. The first wave of infections was in the Northeast and the second in
The past three sessions have been characterized by cyclical sector and value-style leadership. Equity market rallies on cyclical leadership are considered more sustainable/healthier that rallies with defensive sector leadership. And new highs on defensive sector leadership are considered unsustainable. The past three sessions of cyclical/value
As previewed, yesterday’s strength in value sectors (Financials, Materials and Energy) came at the expense of high-quality secular growth names within Tech. Financials are generally considered the bellwether of value sectors and we’re expecting incremental direction from money center banks as many report Q2 results
Three large banks (BAC, C and JPM) report Q2 earnings tomorrow before the open with loan loss reserves and forward guidance around reserves as the most critical metrics to watch. Any commentary tied to the consumer and small businesses will also receive a good amount
The Economic Surprise Index (ESI) hit another record high of +225.90 today vs a prior cycle high of +84.5 reached in December 2017. The ESI measures the upside or downside difference between the reported number and the consensus estimate. The massive gap between the previous
I know the headlines read differently, but new case and hospitalization data in AL, CA, FL, NV, SC and TX are showing early signs of peaking momentum. If the outbreaks in these states follow curve dynamics present elsewhere, case counts should begin to decelerate within
Since the March 23 low, value sectors have outperformed for two brief windows matched with decelerating US infection rates in the Northeast (Tri-state area) and Midwest/Mid-Atlantic regions. The last major period of value sector outperformance was in 2016 when the move lasted more than 12
Financial markets are closely tracking coronavirus outbreak metrics and ignoring the headlines. And the S&P 500 is giving any positive angle the benefit of doubt due to other highly supportive factors including: 1) unprecedented levels of stimulus; 2) booming US money supply/liquidity;
