The most important considerations for equities are always interest rates and bond yields. Both are extremely bullish for equities at the moment. Money supply is a massive input for the economy 6-9 months forward (very strong correlation between M1 to PMI data two months forward)
The drivers behind yesterday afternoon’s fade include: 1) Los Angeles lock-down extension news; 2) California State University System announcing plans to hold all fall classes online; 3) concerns around increased US-China tensions after a group of senators introduced sanctions legislation and…
There are more than two sides to every story, but we’d stay focused on liquidity dynamics. Again, the current recession is the result of a completely exogenous shock with no bad actors to blame and therefore, no moral hazard in the policy response that has
The S&P 500’s ~30% recovery from the 3/23 trough comes as a surprise to many investors who remain cautious and frustrated by the rally. They remain bearish because equity prices have disconnected from economic fundamentals. Of course, equities are always disconnected from present economic fundamentals
Fed funds futures are beginning to point in the direction of negative interest rates in 2021. The ECB currently has negative interest rates, which penalizes money kept on deposit.
Bearish equity sentiment as measured by the American Association of Individual Investors (AAII) weekly sentiment poll reached an all-time record of 52.07 on March 26, 2020. The S&P made a cycle low two days earlier on March 23, 2020. It’s a weekly survey so it
Most expect the path for the SPX is largely incumbent on the speed of the economic normalization process. But the speed is probably less important than the linearity with concern over the reemergence of community spread and a possible reinstitution of lockdown measures by region.
Bearish equity sentiment, light equity positioning and massive amounts of liquidity remain highly supportive. Individual investor equity sentiment is a highly reliable contrarian indicator at extremes. While bearish equity sentiment reached an all-time record high on March 26, it remains very elevated with a 50-day
Linearity has been the big theme during Q1 earnings calls with glimmers of hope (MA, V and BAC notably) for consumer spending trends stabilizing in April and improving in May. CQ1 earnings season continues this week with DIS being the last ‘major’ report before investors
The S&P 500 continues to mostly tack the US new case curve. US new case counts are well off their apex from early April, but unable to inflect meaningfully lower as increased testing capacity leads to more discovery. The avalanche of policy stimulus since late
