Shares rose Tuesday, raising concerns – tensions in Washington-Beijing, the lack of a US incentive package for coronavirus, and the resurgence of viruses in Europe.
Away from the bull camp is the lead strategist of Miller Tabak + Co. Matthew Maley, who sees shares mature for a decline of almost 10% to 15%. An overbought stock market, particularly within megacap technology stocks, uncertainty over a new stimulus plan, US-China relations, and fears of an autumn pandemic wave should make investors uneasy, he says.
But he has a more “constructive” view on how the market will perform in the fourth quarter. In us call of the day, Maley proposes to repeat a strategy from earlier years – “increase cash now” to take advantage of next fall, and maximize profits in the rally later this year.
“Those who followed our Jan / Feb suggestions were very happy when March and April ran … and we think they will also be very happy in the next two months if they follow the same strategy,” Maley says in a recent note to clients.
The Federal Reserve is key here. “The Fed’s number one is the credit markets, not the stock market. Only a sharp decline in equities would destabilize the credit markets, not a 10% -15% correction, ”he says.
That said, he expects the Fed to reopen the spigots if that correction threatens to become more ugly, as seen in the first quarter. That would “lead the S&P to run to 3,600, but we also believe it will be very difficult for the stock market that DAT rallies strongly without experiencing a normal / healthy correction in advance,” says Maley.
History is also a factor, with the U.S. presidential election difficult. He notes that the stock market has grown from election day (or shortly thereafter) until the end of the year on 10 of 12 past such occasions since 1972, with an average gain of 7.2%. And that rally will come “regardless of who wins the election in November,” he says.
The brand
Dow
YM00
,
S&P
ES00
and Nasdaq
NQ00
futures increase, in addition to European equities
SXXP
,
while Asian markets drifted.
The map
Here’s how the first half of the year went for the largest sovereign wealth fund in the world, the Norwegian Government Pension Fund Global, which lost $ 21.3 billion in the first half of 2020:
The buzz
A trio of retailers has delivered strong results, with shares of Walmart
WMT
, Home Depot
HD
and Kohl’s
KSS
all climb into premiere.
The US has imposed new restrictions on Huawei after President Donald Trump reiterated that the products of the China technology group are spyware.
Another tech giant may have entered the race to buy social media group TikTok, with Oracle
ORCL
reported in preliminary talks with Chinese owner Bytedance to buy its operations in four countries. Microsoft
MSFT
has been a potential buyer up to this point.
Videogames maker Epic seeks temporary restraining order in California to block iPhone maker Apple
AAPL
of removing hit game “Fortnite” from the App Store. Epic’s fight may just help raise an anti-trust probe against big tech.
The Virtual Democratic National Convention kicked off Monday, with a keynote speech by former First Lady Michelle Obama delivering a blistering attack on Trump.
A lighting data calendar includes home start – the number of new homes on which construction has begun.
Random reads
Becomes Portuguese president a hero of the Algarve.
What we need: A new baby panda is on its way to Washington’s National Zoo.
How the UK government earned an “F” from students.
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