It Never Makes Sense at the Beginning
The common denominator among all bull markets throughout history is that they seem quite odd at the beginning. Whether it was the riots of 1991, the housing bust of 2008-2009, or the tech wreck of 2001-2003, bull markets sprang from each of these crises’ at the point of maximum pain and confusion. As we emerge from the COVID-19 crisis and deal with continued civil unrest, it’s important to remember that chaos and uncertainty sow the seeds of recovery as strong companies retool and go on offense at the expense of their weaker competitors.
As usual, we will do a quick performance review along with a discussion around attribution and the factors contributing and detracting from performance. Second, we are going to take a close look at the ongoing jobless claims data and what some of the trends both in the initial and continuing claims are hinting at about the state of the U.S. economy as we emerge from the COVID-19 shutdown. Along with our jobless claim analysis, we will run through the surprising impact of COVID-19 on U.S. disposable income and savings rates.
Additionally, we will measure the health of the current market bounce by assessing the sponsorship of the current market rally and whether breadth is continuing to expand or if there are signs of exhaustion as we enter the summer months. Lastly, we are going to measure investor positioning data to assess whether the continued rally in stock prices has dented investor pessimism or if the rally is only serving to increase resentment and disbelief, which are fantastic contrarian indicators.
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