It is only the nature of the market that the coronavirus pandemic has forced all fund managers and analysts to become hobbyist epidemiologists.
So here are some of the thoughts from COVID-19 by Christopher Wood, global head of capital strategy at Jefferies. In fact, he is encouraged by the latest week of coronavirus data that has seen cases grow outside of the New York metropolitan area.
He notes, for example, that the median age of new positive cases in Florida has dropped from 50 in April to 33 in recent days, and that, crucially, deaths are declining even as new cases accumulate. In addition to the point that more new cases are being detected because testing has increased and younger, healthier people are contracting the disease, Wood raises the possibility that, like severe acute respiratory syndrome, COVID-19 simply burns. himself as he mutates. a less virulent form over time.
“If such is the case, he is extremely optimistic. Investors should keep an open mind about such a possibility, “says Wood. More good news on the coronavirus front comes from Western Europe, as new cases and deaths, outside the UK, are roughly 90% lower eight weeks after the reopening.
Wood recommends a bar strategy of owning growth and value stocks. Growth stocks have outperformed in recent times due to second wave concerns, while value stocks should rebound when the V-shaped recovery talk hits the market, he says. A renewed move in cyclicals should also lead to renewed higher performance for Europe and Japan, given the greater cyclical orientation of their indices, he adds.
If he’s wrong about the virus, Wood still doesn’t believe widespread shutdowns will occur. That point was reinforced by President Donald Trump himself in a tweet, who said that the US economy will not close again.
The buzz
Friday is the day of the annual reconstitution for Russell stock indices and is generally one of the highest volume days of the year.
After conducting stress tests at large banks, the Federal Reserve said it is requiring large lenders to preserve capital by suspending share buybacks, 70% of payments in recent years, and is also limiting payments dividend. The bank’s shares rebounded on Thursday due to a relaxation of the restrictions.
Ecommerce giant Amazon AMZN,
will announce the purchase of autonomous car developer Zoox, according to reports in The Information and Financial Times. The FT report set the price at $ 1.2 billion.
Clothing manufacturer Nike NKE,
it narrowed to a fourth-quarter tax loss on a 38% revenue drop. Big Lots BIG retail closure,
Sales said they were well above expectations.
May personal income data is due at 8:30 am ET. Of particular interest will be the degree to which the savings rate drops from the astronomical 33% in April.
The United States Senate voted unanimously to sanction Chinese officials under Hong Kong’s national security law.
The Trump administration urged the Supreme Court to repeal the Affordable Care Act.
The market
US Stock Futures ES00,
YM00
I didn’t see much movement on Friday morning.
CL.1 oil futures,
Rose. Gold GC00,
bordered higher.
The USDJPY dollar,
fell against the Japanese yen.
The graphic
Bank of America did the math on where the markets would go from here if they followed the earlier bear market manifestations, and that projection would land on the S&P 500 SPX,
between 3,300 and 3,600. The strategists said they are tactically optimistic about expectations that second-quarter earnings may surprise to the upside: “There is rarely a big downside when everyone is so interested,” they say wryly, but strategically bearish. They say 2020 is likely to be seen as a low secular level for both inflation expectations and bond yields, and they advise investor diversification towards asset / bond / cash / gold allocation / 25/25 / 25/25 or the allocation of growth / performance / quality / inflation factors before 2021.
Random readings
NASA offers a prize of $ 20,000, for a space toilet that can run on the Moon.
A “mysterious new creature” has been unearthed in Australia.
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