Why Were Markets Bullish Last Week?

When is bad news good news? Take a look at last week.

Major stock indices in the United States hit all-time highs on Friday, despite a lackluster employment report and a surge in COVID-19 cases, reported Lewis Krauskopf of Reuters. During the week, we saw:

The slowest jobs growth since the economic recovery began. The Bureau of Labor Statistics reported 245,000 jobs were created in November. “…a key sign of holiday enthusiasm – the hiring of thousands of workers to help with the holiday retail rush – simply didn’t happen this year. Some of those workers – but clearly not enough – are helping with online shopping duties, filling warehouses around the country, or driving vans from house to house,” reported Avi Salzman of Barron’s.

New unemployment claims remain steady. More than one million people a week are filing first time jobless claims, reported Dion Rabouin of Axios. On November 14, more than 20 million Americans were receiving unemployment assistance.

It’s difficult to know how much weight to give this data since the Government Accountability Office shared weekly unemployment insurance estimates issued by the Department of Labor “… have potentially both overestimated and underestimated the total number of individuals actually claiming unemployment insurance…due to state backlogs in processing claims and other data issues…”

COVID-19 cases spiked across the United States. Coronavirus-related deaths hit a one-day record last week, and “…hospitalizations surpassed 100,000 for the first time this week, leaving hospitals in some regions of the country without enough beds in intensive-care units to meet their patients’ needs,” reported Melanie Evans of The Wall Street Journal. This is undermining consumer confidence and depressing economic activity.

In light of this news, why were markets bullish?

Signs the economic recovery is faltering create a strong incentive for Congress to pass a stimulus bill in 2020 instead of delaying until next year, reported Barron’s. An analyst cited by the publication said, “Under the circumstances, it is hard to be a seller of any risk asset as long as there is a good possibility of getting a deal done…”

During the next few months, markets may be quite volatile. Hang tight and keep your eyes on your long-term financial goals.

Best regards,

Womack Investment Advisers, Inc.

WOMACK INVESTMENT ADVISERS, INC.
Oklahoma / Main Office: 1366 E. 15th Street - Edmond, OK 73013
California Office: 4660 La Jolla Village Dr., Ste. 100 - San Diego, CA 92122
Phone (405) 340-1717 - Toll Free (877) 340-1717

Comments

Womack Weekly Commentary: September 18, 2017

Womack Weekly Commentary September 18, 2017 The Markets “In theory, there is no difference between theory and practice, in practice there is.” Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No . From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do: “Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.” The au...

Another Tornado Record's in Sight for U.S. as Thunderstorms Boom

Bloomberg by Brian K Sullivan Another wave of tornado-spawning thunderstorms is set to rip across the Great Plains and South this week, putting the U.S. within reach of a record year for life-threatening twisters. Severe storms will drench a swath of the country from Texas to Mississippi over the next five days, according to the U.S. Storm Prediction Center. Through Thursday, 369 tornadoes have been reported across the country, the most in five years and more than double the normal number of sightings. An active jet stream and unusually balmy weather are to blame for the burst of deadly tornado activity, the storm prediction center said. Strong winds have dragged storms into the warm, humid air that’s blanketed the eastern half of the nation, creating conditions ripe for a weather phenomenon that leads to at least $400 million in damage a year in the U.S. “We have a severe threat starting today and continuing for each of the next five days through at lea...

Pandemic-Driven Demand Is Providing Fuel for Investors

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: · Technology . Today, digital technologies support nearly all group interactions, which has accelerated innovation. Traditional video communications platforms are in high demand, and multi-person virtual platforms are emerging. Robotics innovations are racing ahead, too. Robotic dogs enforce social distancing in Singaporean parks, reported Accenture. Other types of robots sanitize streets and facilitate contact-less delivery around the globe. · Consumer products and services . COVID-19 increased demand for staples, cleaning, and personal hygiene products. The virus may have inspired deeper and longer-lasting changes in consumer behavio...

Womack Investment Advisers

Search This Blog