Economists (and the markets) were riding high off of Friday's shining beacon of a jobs report, but some of that shine has rubbed off as analysts dig deeper into the numbers and reveal how a misclassification error monkeyed with the results. The main takeaway? The news is still good, just not as good as initially thought. Reopening is certainly powering some of the momentum, as it is in the manufacturing sector which has also gained some decent ground recently. Are these steps toward normalcy also injecting fuel into already-hot (too hot?) equities? More evidence suggests the S&P 500® Index is overbought and the Nasdaq just topped 10,000 for the first time ever, thanks primarily to fresh all-time highs from the usual roster of big tech names—Amazon, Facebook, Microsoft, and Apple. What's more, demand for shares of bankrupt companies has surged; Hertz stock has risen nearly 650% since its post-announcement low. Even small caps are in high demand! Are investors feeling a little overconfident now that all 50 states have begun lifting restrictions? While COVID-19 numbers are declining in the U.S., domestic hotspots remain and global numbers are still climbing, so Dr. Fauci's "worst nightmare" isn't over yet. One thing's for sure, we'll be tuning in as the FOMC releases its latest policy decisions—and first quarterly forecasts of 2020—this afternoon, which should give some indication of how they see the economic impact playing out from here.
1. Imagine how difficult it is to accurately count tens of millions of people in all the various categories...
Source: WSJ Daily Shot, from 6/9/20
2. We know April and May's data is horrible, but as we re-open, manufacturing is looking up. May the trend continue!
Source: WSJ Daily Shot, from 6/10/20
3. Government fiscal stimulus has been massive and fast:
Source: WSJ Daily Shot, from 6/10/20
4. Time for a rest?
Source: WSJ Daily Shot, from 6/9/20
5. The surge in tech and communications makes sense...but now some companies that have declared bankruptcy are trading at higher prices than before bankruptcy. FOMO?
Source: WSJ Daily Shot, from 6/9/20
6. And recently small caps have been rallying?
Source: WSJ Daily Shot, from 6/9/20
7. The voracious risk appetite has been tough for the bond market...
Source: WSJ Daily Shot, from 6/9/20
8. Large Tech (ChiNext Index) has been outperforming in China just like in the U.S
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Source: WSJ Daily Shot, from 6/10/20
9. As Covid gradually subsides in much of the U.S., globally, new cases are still rising at well over 100,000 cases/day.
Source: JHU CSSE, as of 6/10/20
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Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.
