The Northern Star Newsletter 7/16/20 - Stocks Gain After Volatile Week
Message from Jon
When: July 22nd
Time: 12:00 to 12:45pm
Topic: Where We Are and What We Know Now
Jon McCardle, AIF & Tyler Hardt, CFA, MBA
We are heading into earnings season and according to our call this morning with our CFA, banks will be the defining portion of earnings this week. If they demonstrate an increase in loan losses due to Covid-19 or if they report more of a flat number, this will further confirm the progressing of or faltering of the US economic recovery efforts.
Our indicators are bullish on Stormguard and still favoring cash as the number one asset class on our point and figure system.
We are concerned about the market conditions still, with the end of the month producing a few topics of interest.
PPP loans will be tested to see if they will be granted loan or grant status, determining whether the companies who borrowed the money have to repay it or if it will be forgiven or not.1 This may become a catalyst for added payroll numbers by week's end in our opinion.
The Government has until August 7th to determine if more stimulus is on the way or not and this goes straight to the question of liquidity and the number one reason for the rally in the markets at present in our opinion.2
We have the presidential campaign with some interesting and possibly problematic tax issues at stake that could make Wall Street even more uneasy as we progress into the fall.3,4
We have the spiking of Covid reemerging that is causing a lot of states to rethink their opening strategies and even some to reverse them. This may create some tensions with the planning and modeling many investors have for making their investments as well as a resurfacing of concerns about the V-shape vs U-shape recovery.5,6
The major tech companies are becoming very expensive due to the passive investing efforts of investors coupled with the FOMO piling on by retail investors and hedge funds alike in our opinion. This may continue until one day when it doesn't and then, uh, oh! This brings to mind Wile E. Coyote when he runs past the edge of the cliff and doesn't realize it until it's too late and then...
I will be traveling and out of the office Wednesday-Friday, but staff will be in should something arise.
Till we speak again, enjoy your week!
Stocks Gain After Volatile Week
WEEKLY UPDATE - JULY 13, 2020
The Week on Wall Street
Stock prices notched solid gains last week, looking past an increase in COVID-19 cases and any potential economic concerns raised by the trend.
The Dow Jones Industrial Average increased by 0.96%, while the Standard & Poor's 500 climbed 1.76%. The Nasdaq Composite Index bounded 4.01% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained just 0.07%.