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Wkly Round-Up thru May 1st 2020; Tug-O-War Continues

Hey everyone, the push/pull in the markets continues with the bears and bulls each staking claims to what’s to come…and many larger funds are staying on the sidelines or, at beast staying neutral until more clarity is given. But not in corporate earnings but in the re-opening of the US Economy. This is still much work to do and we’ll see where price action wants to go from here but I suspect it will be mostly a choppy environment with plenty of sharp moves but up and down.

Market Sound Bites:

• The US Economy is in a free falls according to Government Economic data yet the markets just finished one of its best months since 1987…NASDAQ lead the way and was up 15.45%; The DOW was up over 11.08%; and the S&P up 12.68%…and since the lows made on March 23rd, most indexes were up about 30%…contrasts those performance numbers that show US Economic data reported over 30 million people out of work we saw this past week’s GDP number come in at a minus 4.8% (Europe was much worse coming in at a minus 14.4%)…and we can only guess at how bad the Q2 numbers will be since this Q! number really only includes 1 month of economic slowdown whereas Q2 data will showcase the bulk of the COVID-19 impact…the index performance data is making a big bet that we will see better days ahead and the recovery, once people come back to work will be faster than reported…also helping is the tremendous amount of liquidity injected into the equity markets via fiscal and monetary policies…all designed to help shorter term but intended for any longer term remedy…In addition, and not factored into most economists’ forecasts, is the potential vaccine and other lifesaving drugs that will only increase the confidence levels of consumers allowing more to resume a more normal daily work schedule…The risk of course is if any forward optimistic forecasts fall down then the resulting move lower in index prices will be fast and furious.
• But given the large bounce of March 23rd lows we can more than likely expect market conditions will cool down a bit and price action will become choppier and range bound but highly news driven on possible vaccine and drug remedies and the degree to which States can reopen economically…
• We have also see, with this nationwide stay-at-home mantra technology companies hold up very well in current markets conditions, especially those that support the work-at-home crowd…and even though a few key technology companies (MSFT, AMZN, GOOGL, FB and AAPL) now represent over 20% of the S&P movement this in and of itself is not too concerning…most of these companies have been growing at substantially greater rates due to the cyclecar growth trends in cloud computing and remote work environments…but moving forward we will see stock picking firms vs passive index firms perform very well…
Enjoy this Weekly Round-Up;

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