Markets are always looking 6-9 months into the future and the direction of growth matters more than the magnitude. Based on May data, we can confidently say the US economy is growing, a business cycle has started and the 2020 recession was the shortest one
Yesterday’s rebound in the S&P 500 was attributed to several drivers, but the most important was the better-than-expected May retail sales that followed a surprisingly strong May Jobs Report on 6/5. Yesterday’s retail sales number pushed the US Economic Surprise Index (ESI) to an all-time
Yesterday’s intraday rally followed a Fed announcement about removing structural hurdles on corporate bond purchase eligibility for its facility originally announced in March. The Fed had been requiring that companies register their bonds for inclusion, but the associated stigma kept companies from proactively enlisting. To
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The short-term bearish narrative includes two main risks including escalating US/China tensions and the possible reimposition of coronavirus lockdowns. A third risk around US protests is sometimes cited, but we think it’s far smaller and probably inversely correlated to the other two. We expected US/China
US high frequency data (traffic, employee time management and weekly claims for example) continues to suggest a steady rebound in overall US activity, but there’s clearly a lot of variance between states. A Reuters article this morning citing Homebase data noted employment is back to
The sell-off in US equities mostly attributed to bearish FOMC/Powell takeaways on the economy, rising Covid numbers and concerns of speculative excess from specific investor groups. Rising coronavirus hospitalizations in some US states suddenly in focus after US case counts reaches 2 million. While this
Recent strength in cyclical/value sectors is unwinding for a second consecutive session. It’s too early to make a call and we suspect today’s Fed meeting will have some influence in near-term sector dispersion. Also note some non-confirmation in cross-market indicators like the Gold/Copper ratio that
The S&P 500 is up +44% since the March 23 low with the z-scores on some momentum indicators nearing 1.5σ. The SPX is ‘taking a break’ today ahead of tomorrow’s FOMC meeting. Concerns about messaging risk focused on a taper-tantrum-like bond yield spike seem misplaced.
Cyclical sector leadership is important for the sustainability of broad market gains. The early outperformance of cyclical sectors in late March gave us extra confidence in the sustainability of the rally off the 3/23 low. It also kept our minds open to the possibility the
