The last two weeks of initial jobless claims came in lower than expected, the July Jobs Report exceeded expectations, July manufacturing/services ISMs were well ahead of consensus and PPI/CPI readings were firmer this week
The narrative on vaccines has shifted from ‘if’ to ‘when’, which has also shifted the predominant investment theme from ‘COVID winners’ to ‘recovery outperformers.’ You can see this in the price action of airlines, casinos, cruise lines and hotels over the past 5-7 sessions. You
Last week, the S&P 500 broke through another consolidation zone, filled the downside gap from February 24 and ready to test the all-time high of ~3390. Look for the S&P 500 (SPX) to approach 3390 on further improvement in US COVID statistics, with the S&P
Overall equity positioning remains light, but positioning in software is crowded and multiples are at all-time highs. Software is the consensus long and ‘work from anywhere’ has almost become a safe-haven asset.
For the past three months, we’ve argued in favor of cyclical stocks with sustainable dividend yields. These are cyclical companies with 2019 EBITDA numbers at 4x the cost of their dividend. You could cut the EBITDA numbers in half and still have plenty of room
Mnuchin said he’s trying to complete the fiscal package agreement by the end of the week, which was echoed by Pelosi. McConnell said he would accept whatever the White House and Democrats agree upon even if that means keeping supplemental Federal unemployment benefits at $600/week.
With the key Q2 S&P 500 earnings metrics now well entrenched and understood, the focus for the balance of the week will shift to macro data. Tomorrow’s release of July ADP private payrolls and July Services ISM will be important for markets ahead of Friday’s
Little progress has been made on a fifth coronavirus relief package, but there’s interest from all sides to get something done. Timing is important as the longer this drags out, the greater the potential for lasting economic damage.
Dollar: The recent decline in the dollar mostly stems from a perceived growth and policy differential between the US and Europe. Part of the perception was due to July coronavirus trends in the US vs Europe. Just weeks ago, it seemed the US was the
Today’s risk-off tone comes a day before the fiscal cliff arrives and agreement for a relief package seems distant. The risk-off tone will likely remain until there’s a deal. If there’s no progress on a broad package by 8/7, we’d expect Congress will just handle
