Hey everyone, from my offices here in South Florida I can see the beach and the sun is out but I know in about 3 hours or so we’ll be visited by Isaias, the Hurricane currently forecasted to barrel up the US East Coast. And like Isaias, the US Bull Market is constantly moving higher, even given the horrendous Q2 US GDP numbers…so where to from here? Get my take in this week’s Weekly Round-Up Below;
Weekly Sound Bites;
• The week finished on a bright note with the 4 horsemen (AMZN, FB, AAPL and GOOGL) exceeding Q2 Earnings expectations and 3 of the 4 moving markets much higher on their results…we’ve seen Q2 was the best of times for these companies and the worst of times for many others…and the US Consumer is held together by the Cares Act, the US $2.3 Trillion Fiscal Package to help bridge the income gap from being unemployed…currently the Dems and Repubs are far apart in their new Fiscal Package but most participants believe another $1 Trillion plus is coming shortly…Consumer wages and salaries plunged over &680 Billion annualized rate, The Cares Act helped drive personal income over $ 1.386 Trillion…
• Thus far we’ve seen over 300 of the S&P 500 companies report earnings and about 85% are beating Wall Street Expectations by an average of 22%…this is a record beat percentage and it shows the very low expectations most companies faced coming into this Earnings Cycle…as a point of comparison, in Q1 about 70% of companies beat estimates by an average of 3%, which was solid but not too remarkable…but many other larger cap stocks from the manufacturing and auto sectors have lagged their technology brethren so we are seeing a market, which is moving higher, lead by a smaller supply of companies…
• The US Q2 Numbers came in at a negative 32.6% annualized rate (the largest drop since the records began in 1947) but making sense of these numbers is almost impossible due to the nature of the forced economic shutdown…the US has retained its top AAA Credit Rating from Fitch even though this past Friday they revised the nations credit to negative…thus far in Q2 the US has pumped about $5 Billion in the US Economy which is compared to the nominal GDP of Q2 of $4.85 Billion…The Yields on US 10 Year Treasury closed the week at .536% showing the Debt markets don’t have a lot of confidence in the near term future of the US Economy…we are also seeing portfolio hedging costs higher and the question on the minds of many funds is do we hedge fear (like buying Puts which puts a large drag on your portfolio performance) or buy fear, like allocation money to value and underperforming stocks, like banks…
• We’ve seen the near term destruction of the US Dollar as a basket of currencies moves higher against the US Currency…The Euro, which is weighted over 57.6% of the US Dollar Index has moved up dramatically in the past 4 weeks on the expectations of European markets coming out of the pandemic much quicker than the US…
Enjoy this week’s update below;
Don’t Be A Rat Brain Trader – Be The Red Stripe Zebra !!
Trade Smart !
hpb
