Bellevue Perspectives


Randy's Recap

Pipe

US Stocks and US Markets Continue to Lead

The recovery in the United States financial markets continues, and the NASDAQ market is now positive for the year and is close to retaking the 9,000 level(see chart below).  Most on Wall Street and Main Street are asking how is that possible, given all the negative economic news and the lack of economic activity because of the global pandemic or COVID-19 crisis.

Upon reflection, I see three possible reasons why stocks continue to recover in the United States and I do think the rally may continue for a while longer due to these three reasons.  First, the Federal Reserve acted quickly to add liquidity to the market and reduced interest rates to or near zero, making the bond market expensive and fixed income investments less attractive.  Second, investors are experiencing FOMO or fear of missing out, they see the rally and want to participate and not miss the upside.  We can tell this is happening because the VIX Index, or the fear gage as some call it on Wall Street has dropped to near 30.  The VIX index hasn’t been this low since the market turmoil started in haste in early March. Finally, and most importantly, I think the market is telling us something about earnings.  The market is predicting the earnings recovery for companies may be in fact faster and quicker than most expect.  Companies may figure out how to do more with less and wait to add back overhead.  This means more earnings will drop to the bottom line more quickly and investors and stocks love that.  This also means that the unemployment rate may stay elevated for longer.  Where this argument losses steam is consumers make up two thirds of all economic activity so if consumers aren’t working, they aren’t spending on goods and services either. It is possible that employment picks up quicker than expected too. Call me crazy, or right, or neither.  You decide.

Enjoy your weekend and all the sunny weather expected in Seattle.  Happy Mothers Days! Don’t forget Moms on Sunday!!!

Click Here  To view the chart

I plan to produce these Market Moment notes from my office in my basement every week on Friday.  

Please let us know if you find them helpful.

In addition, if you want a second opinion on your portfolio or your retirement planning we are more than happy to provide one. We want to thank our community and our clients for making introductions to other people who can benefit from our services.

Stay safe and keep your family close during these difficult economic times.

More next week.

Randy

Partner Hightower Bellevue Advisors

HighTower Bellevue is registered with Hightower Securities, LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities, LLC; advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and Hightower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of Hightower Advisors, LLC, or any of its affiliates.