What will stand in the way of market gains? Clearly, it’s not bad news about COVID-19, as investors try to see the silver lining in these uncertain times.
Take this chart that shows how Arizona cases have started to flatten, by Pantheon Macroeconomics, which expects that state to respond earlier than most to a renewed increase in cases, other affected states are likely to flatten in the coming weeks:
Our call of the day Thomas Lee, director of Fundstrat Global Advisors, says that the resilience of the stocks over the past week shows that investors have been “preparing for a more serious path compared to COVID-19.”
In a note to clients, Lee says “the data shows how abruptly hedge funds moved into a bearish position in June.” And along with the high cash levels of mutual funds, balanced funds have the highest cash balances (% of assets under management) since before 2009. Therefore, the fact that ‘could have been worse’ = risk ”.
That does not mean there is not a “tragedy” in the United States, he said. “But the good news is that all states facing an outbreak are in fact ‘correcting the course’,” with bars closing in multiple states with outbreaks and serious reopens halted elsewhere.
“From our point of view, daily death statistics are the most important metric to look at. And as long as deaths continue a flat / low trend and now with states ready to see a spike in the next 2-3 weeks, this surely looks like the risk makes sense, ”Lee said.
The bottom line, Lee says, is that a combination of stocks near their highs and cautious positioning means investors should remain overweight. And although the gains are about to start, and will be “lousy”, with little guidance, everything has been well telegraphed, in his opinion.
Here are the factors Lee believes will keep stocks on the rise:
Fundstrat
The market
There is no sign of a shift from that positive momentum, with Dow YM00,
S&P ES00,
and Nasdaq NQ00,
higher futures, along with European stocks SXXP,
In Asia, Chinese stocks 000300,
It rose 3.4%, leading gains across the region on optimism ahead of second-quarter gross domestic product data to be released later this week.
The graphic
BTIG chief strategist Julian Emanuel tells clients in a note that the upcoming earnings season could be a “potential catalyst for performance review” in two groups of stocks.
These best performing products: Amazon AMZN,
eBay EBAY,
and above all technology: up to 40% more to date, could fall into the opinion that nothing they report or say will be “good enough” to sustain profits, says Emanuel.
In contrast, the reporting bar for these financial and underperforming stocks, down 30% to date, may be so low that the only way for those stocks is up, he says.
The buzz
PepsiCo PEP,
Shares rise after results as the second quarter earnings season begins. Citigroup C,
JPMorgan JPM,
and Wells Fargo WFC,
report on Tuesday.
Pfizer PFE,
and BioNTech BNTX,
stocks are increasing after their COVID-19 vaccine candidates obtained the Fast Track designation from the Food and Drug Administration.
Chip maker Maxim Integrated Products MXIM shares,
Analog Devices ADI rival news are coming up,
will buy it in a stock deal from Churchill Capital CCXX special purpose acquisition company,
News is emerging of a $ 11 billion merger with healthcare provider Multiplan.
China is banning Senators Marco Rubio and Ted Cruz for their criticism of government policies towards minority groups and religious people.
The country’s top testing official disagrees with infectious disease specialist Dr. Anthony Fauci’s advice to stop reopens in states where cases are emerging. Disney DIS
is taking the heat for the reopening of theme parks in Florida, which broke US records with 15,299 new cases on Sunday.
The federal budget will be published later.
Random readings
A famous Bollywood family has tested positive for COVID-19.
With the fights canceled, a Greek student spends 48 days cycling home.
The viral video shows British revelers unmasked on a Spanish island:
Actor John Travolta says that his wife, actress Kelly Preston, died of cancer:
Need to Know starts early and updates until the opening bell, but sign up here to receive it once in your email box. Be sure to check the item you need to know. The email version will ship at approximately 7:30 am EST.
Follow MarketWatch at Twitter, Instagram, Facebook.
.
