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;
The increase in the June ISM non-manufacturing Index was the largest single-month gain in the index’s 23-year history. Of course, the decrease in April was the largest-ever decrease. Nonetheless, the June new orders component was notably strong, coming in at 61.6 vs 41.9 in May,
June payroll adds of +4.8MM far exceeds consensus for a second consecutive month and clearly a positive development. However, the BLS statement pointed out the largest gains came in leisure and hospitality businesses with employment in food services and drinking establishments increasing by ~1.5 million.
Thursday’s release of weekly jobless claims and June payroll data (day early because markets are closed Friday) has the potential to shift the narrative. Treasury yields are particularly sensitive to payroll surprises and with increased forecast uncertainty (unusual high dispersion among economists), seasonally light liquidity
