First, we wish you and yours a safe, healthy and enjoyable Memorial Day Weekend.
Welcome to the often-assumed kick-off to summer.
The expected rest in the market did not pullback as much as one would have expected. Given the news – we all need to recognize that markets will sniff out surprising recoveries long before we will see it either in the news or in our current presence. It is how many are completely confused by the “dislocation” of the stock market and the present picture of the disaster in the data being read each morning.
The summer warmth should begin to clear that up a bit – but it also brings with it the normal hazy period of the calendar. This year might be slightly different as the “at home group” is still mentally staying at home.
With the vast portion of the earnings season about done – it is likely that the worst of the earnings data is being embedded into the system via Q2 earnings as we speak. This hints that we might also see a very timely “summer swoon” to take advantage of from say mid-July to mid-August. It is not a coincidence that this is the normal window for almost all summer swoons of the past.
The Good News….
Remember – markets consider “better or worse” and “next” not “now”. The dollar is strong, the globe is recognizing that as this dust settles, the US economy will come out stronger and better – building even more jobs in the New Economy.
The cleansing process washing through every company (small or large) across the land will set the stage for a launch pad more substantial than anything we have seen before. It will look like a trade range – but it will be building a spring-loaded foundation into the future.
Long-term investors must continue to patiently let this work through the system. The ugliness of today will become the seeds of the bright new future. That’s not just chatter – it is simply a realistic view of the outcome of every disaster before now.
They were all tough, they were all ugly, they were all “a first”, they were all the end of the world….until they were not.
Note: TSA and driving data, along with the Apple high-frequency data, are all showing that demand and movement is coming back faster than expected. Just check the recent spat over the specific topic of crude oil. For a 48-hour period one month ago, the crude oil negative price was the chatter of all economic data.
Except this month – nothing we were told to fear actually happened. More important, the energy companies which are going under are quickly seeing their assets bought. These are the fastest bankruptcy cases on record for sure. The point? When you listen to all the bad news about dislocation, know this: there is more money waiting to “fix” the problem than there are problems.
Rather than bore you to death with words as we all head off into a long weekend, let’s review some graphs and data while the market ushers in a very low volume day.
First – we can remind ourselves that we are seeing a massive pipeline fill up with targets on vaccines and treatments.
Also – before you get to the trade-range charts, you may feel better reminding yourself of the internals – things are getting better faster than we might assume on the surface. This will all be helped along by the massive amount of capital which has stayed out of this bounce….which has morched into a new bull market….
Notice that we have current conditions which have already improved to levels beyond the lows seen back in 2011, 2002/2003 and even the mid-90’s slowdown.
The demand for cash is off the charts as noted above from Calafia. Call me a nut – but this is BULLISH for the long-term investor. That, my friends, is why the FED is active. The market wants cash -0 it got cash – lots of it. And guess where it went? Into the bank as noted below —- record setting would be a huge understatement. Showtime will need to change their show title soon.
…read ’em and reap…
The top 3 charts are your major Indices. Trade ranges are evident in all but one – the NASDAQ. Tech is showing you – more each week – that the underlying current, sped up significantly by this setback, that TECH will run the future Economy we are heading in to today – strap in and tighten that belt up.
The last chart is the broader market NYSE Composite showing you just where the core elements of importance are as we head into the summer.
Most important as this rocket-ride gets fueled up over the summer:
Make sure we realize while the press will continue to scare everyone with reporting, that Tech, science, speed, 5G, AI, robotics, space, human algo and life algos are the internal industries of the future.
Great for the US – as we are leaders in all of them.
Stay Safe and Healthy
Please remember – we are here to help as always.
Try very hard to reduce your stress – as we all work through this together.
HAVE A WONDERFUL MEMORIAL DAY WEEKEND!