Hey Folks, the first half of 2020 is now in the rear view mirror and it’s time to focus on what’s up ahead. At a minimum I see a wide range of outcomes. Get me take here in this Round-Up.
Weekly Sound Bites;
• So far this year we’ve seen the Tech heavy Index up over 18% (NASDAQ saw its 23rd Record Close) with economically sensitive sectors like materials, utilities and real estate staying mostly flat thus far…in this same vein, we are also seeing Gold move up to price levels not seen since 2011 as investors hedge their bets in the uncertain second half of 2020…for the week we’ve seen Short Interest in NASDAQ rose over 5.2% while the Short Interest on the NYSE rose 2% with the SPY being one of the top shorted assets…On another aside, the analysts have not been able to keep up with the rally in tech stocks with almost half trading above current street’s price targets.
• The nonmanufacturing PMI, a measure of business conditions, posted its biggest monthly gain and moved back into expansion, adding to the string of positive economic surprises. However, as new COVID-19 cases rise and several states slow down or roll back reopening measures, the economic recovery is likely to start losing some momentum. Uncertainty around the path of the virus and the political outcome of the U.S. elections will likely linger over the coming months, but low interest rates and monetary and fiscal stimulus should help sustain the economic recovery later this year and into 2021…
• With 50% of 2020 in the books, the outlook for the second half contains as many roadblocks as accelerants for a wide range of outcomes. This also helps explain the elevated Volatility levels we are seeing in the VIX…. For investors a solid case could be made for both bullish and bearish scenarios…I do see this year’s prevailing conditions persisting such as persistent COVID issues, low interest rates and a very support Monetary and Fiscal support…however, the investment environment is likely to change as we progress through the remainder of this year.
• We should expect the latter half of the year to have “+” signs in front of quarterly GDP results, reflecting the transition from shutdown to reopening. The initial rebound will come from a spurt of pent-up demand as portions of the economy reopen, aided by government payments that filled the gap created by the largest spike in unemployment since the Great Depression. The 3rd Quarter GDP to jump sharply, followed by a much more gradual pace of growth from there, likely taking a few years before the economy returns to pre-virus total output. And of course the labor market will play a pivotal role in how fast folks can get back to work as businesses begin to reopen.
• And in this coming week we will kick off the official 2nd Quarter Earnings Season with Banks in the spotlight. Over 8% of S&P 500 companies will be reporting earnings throughout the week. Important economic data being released include inflation on Tuesday, retail sales on Thursday, and housing starts on Friday.
Enjoy this Weekly Round-Up:
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