1010 B Street
November 16, 2020
Vaccine Can Be A Powerful Word. It’s Worth 14 Points in Scrabble (42 On A Triple Word Square) And, Last Week, It Was Worth A Whole Lot More Than That To Financial Markets.
On Monday, a pharmaceutical company and a biotech company announced preliminary trials of their vaccine show it may be 90 percent effective, reported Financial Times. The revelation conjured tantalizing visions of a future in which virus precautions are unnecessary and life returns to normal.
November 9, 2020
It’s Said Markets Hate Uncertainty, But That Wasn’t the Case Last Week
Despite tremendous uncertainty about the outcome of the United States election, major domestic and international stock indices moved higher and the CBOE Volatility Index, better known as Wall Street’s fear gauge, moved 35 percent lower. Ben Levisohn of Barron’s reported:
November 2, 2020
Last Week, Financial Markets And Economic Data Told Very Different Stories.
Reviewing economic data is a bit like looking in a rearview mirror. Typically, it offers information about what is behind us. For example, last week we learned:
October 26, 2020
Stimulus Talks Led Investors In A Merry Dance Last Week
So far in 2020, stock markets have been sensitive to fiscal stimulus. Last week, there was optimism a new stimulus package could be negotiated before the election. There also was skepticism about whether it would happen. An expert cited by CNBC stated, “There’s a lot of back and forth on stimulus and every headline makes the market move a little bit, but there’s no follow-through because we don’t have a clear picture on that front.”
October 19, 2020
It Was A Turbulent Week For Investors
Waves of positive and negative news buffeted financial markets last week:
The financial sector delivered upbeat earnings news
Currently, many financial companies in the Standard & Poor’s 500 Index have reported third quarter earnings and have done better than expected. Despite upbeat earnings, some companies’ shares declined because of uncertainty about the path of economic recovery. If recovery continues, some banks may have excess reserves; however, if recovery falters and a double-dip recession occurs, banks may need to add to reserves, reported Barron’s.
October 12, 2020
Yes. No. Maybe?
Markets were sharply focused on the status of stimulus last week. First, it was on. Then, it was off. Then, it might be on. Then, it was off again. There was a big bill. There was a smaller bill. There were stand-alone options.
October 5, 2020
Last Week, The Third Quarter Of 2020 Came To An End – And The Fourth Quarter Delivered A Doozy Of An October Surprise
President Trump has the coronavirus
On Friday Americans awoke to the news President Trump had contracted COVID-19. Financial markets responded with relative equanimity. After a brief sell-off on Friday, major U.S. indices finished the week, and the third quarter, higher.
September 28, 2020
For Four Weeks, The U.S. Stock Market Has Sparked And Sputtered Like A Campfire In Light Rain
Today, pandemic-driven demand is providing fuel for the investors. The need for certain types of products and services has accelerated and innovation is creating new opportunities. Consider:
September 21, 2020
Investors Weren’t Happy With Central Banks Last Week
After the Federal Open Market Committee (FOMC) meeting, Federal Reserve Chair Jerome Powell confirmed the economy is recovering more quickly than anticipated:
September 14, 2020
Last Week, The Nasdaq Composite Index Set Another Record
So far, 2020 has been memorable for many reasons, not the least of which is the incredible speed at which some events have been occurring in financial markets. This year, we’ve experienced:
September 8, 2020
Stock Markets in The United States Retreated A Bit Last Week.
U.S. stocks have been trending higher for months. Last week, they gave back some gains. The Nasdaq Composite dropped 3.3 percent, while the S&P 500 Index fell 2.3 percent, and the Dow lost 1.8 percent, reported Ben Levisohn of Barron’s.
August 31, 2020
The Stock Market Rallies Like It’s 1986.
August has been a good month for stock investors. At the end of last week, the S&P 500 Index was up 6.8 percent for the month. The Index is poised to deliver its best returns for the month since 1986, when it gained 7.1 percent, reported Financial Times.
The shortest bear market in history is over.
August 24, 2020
The Nasdaq Composite and Standard & Poor’s 500 Indices finished at new highs last week. The stock market is considered to be a leading economic indicator, so strong stock market performance suggests economic improvement ahead.
The Standard & Poor’s (S&P) 500 Index Finished The Week Within A Whisker Of Its February High, Reported Randall Forsyth Of Barron’s
August 17, 2020
It’s a remarkable feat. The stock market has recovered in just 175 days. Historically, comparable recoveries (those following market drops of 20 percent or more) have taken about four years, reported Vildana Hajric, Lu Wang, and Claire Ballentine of Bloomberg Quint.
There Was Good News and Bad News In Last Week’s Employment Report.
August 10, 2020
The good news was the U.S. Bureau of Labor Statistics delivered better-than-expected data about employment. In July, the U.S. economy added about 1.8 million new jobs.
Last Week Delivered A Mixed Bag Of Financial And Economic News.
August 3, 2020
As many expected, the U.S. economy did not fare well during the second quarter. COVID-19 lockdowns and business closings caused productivity to fall by one-third. Real gross domestic product, which is the value of all goods and services produced by our country, dropped 32.9 percent during the second quarter of 2020, reported the Bureau of Economic Analysis. During the first quarter of the year, productivity fell by 5 percent.
Where are we on vaccines and treatments?
July 27, 2020
During 2020, the United States government has spent more than $13 billion on Operation Warp Speed (OWS), which is focused on accelerating the development of vaccines and treatments for COVID-19, according to The Economist. The United States is not alone. Governments around the world are funding similar research.
Is the United States Economy Recovering Or Faltering?
July 20, 2020
It depends on who you ask and which data you consider. For example, last week, the Department of Labor reported fewer people applied for first-time unemployment benefits during the week of July 11. That could be a tick in the positive data column. Week-to-week the number declined from 1.31 million to 1.30 million. The lackluster decline could be a tick in the negative data column since the long-term weekly average is about 20 percent of that number.
Please don’t scream inside your heart.
July 13, 2020
Last week, a reopened Japanese theme park asked patrons to wear masks to help reduce the spread of coronavirus. It also asked them not to scream while riding the rollercoaster. “Please scream inside your heart,” park management urged.
What A Quarter!
July 6, 2020
Who could have guessed a global pandemic would produce outsized stock market returns? Near the end of last quarter (March 23), the Standard & Poor’s 500 Index was down 30.75 percent for the year, and it looked like 2020 was going to be a disappointing year for many investors.
Blame It On The Coronavirus.
June 29, 2020
Stock markets in the United States and Europe retreated last week as the number of new COVID-19 cases increased steadily in America. On Thursday, there were more than 44,000 new cases, the highest daily total to date, according to data from the Centers for Disease Control.
Could It Be the Upside Surprises?
June 22, 2020
U.S. stock markets have marched higher despite a pandemic, an economic downturn, and social justice protests – and a lot of people have wondered why.
The Employment Report Electrified U.S. Stock Markets Last Week
June 15, 2020
The Nasdaq Composite dipped its toes into record territory last week before retreating. Stock indices in the United States rallied early last week on optimism about the reopening of businesses across the country. The Nasdaq Composite rose to 10,000 for the first time ever, before tumbling lower.
June 8, 2020
American stock markets responded enthusiastically to the news U.S. unemployment was 13.3 percent in May. If it seems inexplicable double-digit unemployment would thrill investors, there is a reason. The unemployment rate in April was higher at 14.7 percent, and analysts had forecast the rate in May would jump to 19.1 percent. All in all, that makes 13.3 percent look pretty attractive.
Are Those Green Shoots?
June 1, 2020
In economic terms, green shoots are signs of improvement. If you were paying close attention, you might have seen some in economic data released last week.
It was a good week for stock markets in the United States, but there was trouble in Asia.
May 26, 2020
U.S. stock markets rallied last week. The Dow Jones Industrial Average, Standard & Poor’s 500 Index, and Nasdaq Composite all gained more than 3 percent, reported Ben Levisohn of Barron’s.
America Is Reopening, State by State
May 18, 2020
That’s welcome news for many businesses, but we’re far from business as usual. Last week’s economic news included unemployment hitting an 80-year high, a record drop in retail sales (-16.4 percent), and an unprecedented decline in industrial production (-11.2 percent).
The Stock Market Is Not the Economy
May 11, 2020
It’s an important point to remember when headlines marvel that U.S. stock markets are moving higher while the U.S. economy is contracting. Stock markets are not mindful of the present moment. They are forward-looking, reflecting expectations about what will happen in the months and years to come, explained Mark Hulbert in a MarketWatch opinion piece.
There Are Signs COVID-19 May Be in Retreat
May 4, 2020
Last week, the Centers for Disease Control reported, overall in the United States, for the week ending April 25 (officially week 17 of the coronavirus), the number of:
We Live in Interesting Times
April 27, 2020
There is discussion about whether the saying, “May you live in interesting times,” is a blessing or a curse. At this point in 2020, we all understand why.
Last Week’s Economic Data Was About What You Might Expect In The Midst Of A Virus Crisis That Has Shut Down Businesses And Forced People To Stay Home:
April 20, 2020
Retail sales were down 8.7 percent in March
Retail sales track demand for everything from clothing to refrigerators. The March decline was the worst monthly performance on record, according to Ben Levisohn of Barron’s
In the Wizard of Oz, Dorothy Says To Her Little Dog, “Toto, I've A Feeling We're Not In Kansas Anymore.”
April 13, 2020
Why is the stock market doing so well when the COVID-19 pandemic has yet to peak?
At the end of last week, the Centers for Disease Control and Prevention reported the United States remains in the acceleration phase of the coronavirus pandemic. This phase ends when new cases of COVID-19 level off. The next phase should be a period of deceleration, and the number of cases should decline.
April 6, 2020
Today, many of us understand Dorothy’s trepidation and uncertainty better than ever before.
COVID-19 has changed our world in ways previously unimaginable. In many states, Americans shelter at home, venturing out for groceries, medicine, and other essentials. Parents have become teachers guiding online schoolwork, often while balancing their own work and online meetings. We are learning to manage the loneliness, frustration, and anxiety that accompany quarantine conditions.
The United States Set Some Records Last Week
March 30, 2020
First, we became the epicenter of the COVID-19 pandemic. Popular Science explained:
“An increase of 15,000 known cases in just one day pushed the United States past Italy and China, making it the new epicenter of the pandemic…Experts suspect the actual number of U.S. cases is much higher than currently reported…the United States has tested a far lower percentage of its large population than other hard-hit countries.”
The Coronavirus (COVID-19) Continued to Spread Across The United States Last Week
March 23, 2020
On Friday, March 13, the Centers for Disease Control (CDC) reported there were 1,629 confirmed and presumptive cases and 41 deaths. Last Friday, March 20, the numbers had increased to 15,219 cases and 201 deaths.
March 16, 2020
Mid-week, the World Health Organization (WHO) declared coronavirus a global pandemic. At the time, there were more than 118,000 cases in 114 countries, and the death toll exceeded 4,000 people. On Friday, the Centers for Disease Control (CDC) reported 46 states and the District of Columbia have been affected, so far. As of Friday, there have been 1,629 confirmed and presumptive cases and 41 deaths.
Last Week, Market Volatility Reached Levels That Make Many Investors Uncomfortable
March 9, 2020
On Monday, the Dow Jones Industrial Average surged higher, delivering its biggest one-day point gain in history. The catalyst may have been reports that ‘Group of Seven’ (G7) finance ministers and central bank governors were meeting via conference call on Tuesday. French Finance Minister Bruno Le Maire indicated the discussion would lead to coordinated monetary efforts to address economic issues related to the coronavirus, reported Reuters.
Take a deep breath. We have experienced downturns before
March 2, 2020
Think back to 2018. During the last quarter of the year, major stock indices in the Unites States suffered double-digit losses, much of it during December. What happened next? By the end of 2019, those indices had reached new highs.
Last Week, Major U.S. Indices Posted Strong Gains.
February 24, 2020
The coronavirus appears to have inspired two distinct schools of thought among investors. Some investors currently favor opportunities that are considered lower risk, like Treasury bonds and gold, because they’re concerned about the potential impact of the coronavirus on the global economy. Others are piling into higher risk assets, like stocks, that could benefit if central banks (like the United States Federal Reserve) take steps to stimulate economic growth, reported Randall Forsyth of Barron’s.
Many stock markets around the world moved higher last week.
February 18, 2020
Investors’ optimism in the face of economic headwinds has confounded some in the financial services industry. Laurence Fletcher and Jennifer Ablan of Financial Times cited several money managers who believe investors have become complacent. One theory is investors’ buy-the-dip mentality has become so firmly ingrained that any price drop is seen as a buying opportunity, regardless of share price valuation.
February 10, 2020
That’s welcome news, but the drivers behind share price appreciation appear to have little to do with company fundamentals.
Fourth quarter earnings season is underway. During earnings season, companies let investors know how profitable they were during the previous quarter. With 45 percent of companies in the Standard & Poor’s 500 (S&P 500) Index reporting, earnings are slightly down. If the trend continues, this will be the fourth consecutive quarter of year-over-year earnings declines, according to FactSet.
Prepare Yourself. There Is A Good Chance Markets Will Be Volatile In The Coming Weeks
February 3, 2020
Precautions designed to slow the spread of the coronavirus may also slow Chinese economic growth and, by extension, global economic growth.
Markets Hunkered Down Last Week.
News of the coronavirus outbreak in Wuhan, China unsettled investors around the world. The respiratory infection is related to severe acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS), reported WebMD.
The New Trade Deals Are Here!
The United States and China signed a preliminary trade deal last week. The next day, the United States-Mexico-Canada Agreement was approved by the Senate.
It Was A Nerve-Wracking Week.
Iran fired 22 ballistic missiles at the Ain Al Asad air base near western Iraq and a second base in northern Iraq following last week’s U.S. drone strike that killed a top Iranian military commander. Newsweek reported the bases suffered minimal damage and there were no casualties from the attack. However, Iran mistakenly downed a commercial airliner, killing all on board, reported CBS News.
2019 was a remarkable year for investors with many asset classes delivering positive performance. Both the Standard & Poor’s 500 Index, a gauge of U.S. stock market performance, and the Dow Jones Global (ex U.S.) Index delivered double-digit increases (see the below table). Bonds and gold rallied, too, delivering positive returns for the year.
Investors may find themselves reluctant to ring out the old and ring in the new this week. During 2019, stock and bond markets delivered exceptional returns.
Major stock indices in the United States and overseas are poised to deliver double-digit gains for the year. Even with uncertainty about Britain’s exit from the European Union (EU), the FTSE 100 boasted a gain of more than 10 percent at the end of last week. That’s not bad for a year which included (in the United States) an inverted yield curve, an earnings recession, and a contentious trade war.
Last week was a good week for investors. Ben Levisohn of Barron’s explained:
“The Federal Reserve and European Central Bank both pledged to do what they could to underpin their respective economies. The United Kingdom gave Boris Johnson’s Conservative Party a landslide victory, virtually guaranteeing that the Brexit saga will end, finally.”
On Friday, the unemployment report flashed its numbers like a hair model in a shampoo commercial. The Bureau of Labor Statistics reported 266,000 new jobs were created in November. That was better than expected even after deducting the 40,000-plus General Motors employees returning to work, reported CNBC.
Sometime, probably not so long ago, comedian Dave Barry wrote, “Once again, we come to the Holiday Season, a deeply religious time that each of us observes, in his own way, by going to the mall of his choice.”
On Thursday, U.S. investors may find themselves giving thanks for the bull market.
Year-to-date, the Standard & Poor’s 500 Index, Dow Jones Industrial Average, and Nasdaq Composite have all gained more than 20 percent with dividends reinvested. The MSCI World Index also is up 20 percent year-to-date.
U.S. stock markets climbed higher for the sixth week straight – the longest rally in U.S. markets in two years – and the Dow Jones Industrial Average surpassed 28,000 for the very first time, reported Bloomberg.
According to a source cited by Barron’s, U.S. stock markets are responsible for creating $6 trillion in paper wealth this year. ‘Paper’ wealth is when an asset is estimated to be worth a specific amount. The wealth becomes ‘real’ when the asset is sold.
The Federal Reserve lowered interest rates last week, as expected. There were no enthusiastic fans singing the Baby Shark song, but the Federal Open Market Committee’s decision was well received.
So far, 2019 has been a tremendous year for U.S. stocks. Through the end of last week, the Standard & Poor’s 500 Index had gained more than 20 percent year-to-date, the Dow Jones Industrial Index was up more than 15 percent, and the Nasdaq Composite had risen more than 24 percent.
A lot was unpacked in a surprising and disorderly fashion. There was some positive news for investors who prioritize fundamentals. Third quarter’s earnings season – the period of time when companies let investors know how they performed during the previous quarter – got off to a strong start.
Financial Times reported the United States agreed to not increase tariffs from 25 percent to 30 percent on $250 billion of Chinese imports next week. (Current tariffs remain in place, and it is possible new tariffs will be imposed on additional Chinese goods – electronics, apparel, and other consumer items – in mid-December.)
From trade wars to impeachment inquiries, investors had a lot to ponder during the third quarter. Toward the end of September, they appeared to become more cautious, although it’s difficult to say which issues weighed most heavily. Here are a few questions they may have been asking: