In a week in which the S&P 500 sets a record in the midst of a pandemic, it’s fair to consider at least the bottom 495 parts.
Michael Batnick, director of research at Ritholtz Wealth Management, points out 94% of the S&P 500 SPX,
components trade below their 52-week high, although the median gain is 63% of its 52-week low. This graph really shows how tilted the recovery has been to the larger companies.
Christopher Pavese, chief investment officer at North Carolina Agricultural Investment Firm Broyhill Asset Management, puts together a similar chart comparing the MSCI All-Country ex-US index to the S&P 500, which itself is simply driven by technology -giants.
Pavese outlines all the uncertainties – including whether there will be a second, or third wave, of coronavirus, how many companies will fold and whether record stimulus will create a sharp rise in inflation if the crisis leads to deflation. “What we do know is that we have never seen stock prices at such extremes coincide with this degree of uncertainty. We also know that living in an imaginary world of certainty can create big problems with managing money in the real world, ”he says in an investment letter.
Pavese says there are almost the best opportunities in distressing investing in a decade because he calls the current market unsustainable.
“If markets were to reach half of today’s levels in a year or two, it would seem obvious to everyone in retrospect that current stock prices and extreme divergences were completely unsustainable,” he writes. “The consensus is envious to look at today’s revenue, by looking at the V-shaped rebound in next year’s profit. But we are a long way from anything that seems normal, because profit margins are likely to remain depressed for years due to revenue shortfalls and inconvenient costs. As a result, current stock prices, which are still hanging at high altitudes, leave a slight safety margin and even less to be excited about. ”
The buzz
Former Vice President Joe Biden officially accepted the Democratic presidential nomination, saying the US will overcome what he called a “season of darkness” under his rival, President Donald Trump.
Pfizer PFE,
and BioNTech BNTX,
say their lead coronavirus vaccine candidate triggered a strong immune response and they were able to control it as early as October. If approved, they currently plan to deliver up to 100 million doses worldwide by the end of 2020, and approximately 1.3 billion doses by the end of 2021. Johnson & Johnson JNJ,
meanwhile, is preparing a 60,000-person test in the late stages of its COVID-19 vaccine.
Deere & Co. DE,
rose in premarket trading after agricultural equipment maker reported better-than-expected results.
Tesla TSLA,
remained higher pressure, with the maker of electric cars trading at $ 2,035 in premium trading.
Existing data on home sales could see a jump in July, and flash data on U.S. production and services is also to be thanked. The IHS Markit Flash Index of Composite Eurozone Purchasing Managers slipped to a two-month low of 51.6 in August from 54.9 in July, as the UK said its government debt was £ 2 trillion for the first time .
The brands
FS-futures futures ES00,
YM00,
NQ00,
weaker traded.
The euro EURUSD,
retreated to the weak PMI readings. Gold futures GC00,
glide.
The map
Liberum Capital Markets produced this chart showing returns of shares in the US, adjusted for inflation, are better under Democratic presidents. The broker also screened for the best performance in UK and European equities under various administrations. Among Republicans are UK pharmaceuticals advisors – most notably GlaxoSmithKline GSK,
– defenders contractors, and food and tobacco, and European supplies that do well, are in health care and utilities. Among Democrats, media companies and confidence in real estate in the UK, and car and media shares in Europe are the advantages.
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