Week of October 18, 2020

October 19, 2020

Read on for Our Outlook on the Prior Week and the Week Ahead


Stuff I read that gets stuck in my head

People do not give up their loves and hates as long as life lasts.  Waves of feeling come and go with the passage of time. . . The world is always full of the sound of waves.  The little fishes, abandoning themselves to the waves, dance and sing and play, but who knows the heart of the sea, a hundred feet down?  Who knows its depth?  Yoshikawa, E. 1971. Musashi

Human Tribe & Ingenuity

People working better together and inspiring each other

Americans adapt and create.  New business filings for EINs are up 82% from the previous year.  https://www.bloomberg.com/news/articles/2020-10-14/covid-recession-spawning-entrepreneurs-in-u-s-amid-joblessness?srnd=premium&sref=xuVirdpv&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-billionaires&utm_content=billionaires


Black Swans & Other Market Tidbits

What is on the horizon that could trip us up, or lead us up

Third Quarter earnings season began last week.  Wall Street banks and Delta started the week.  Banks were better than expected, and Delta was obviously hit hard.  Delta ran at only 63% capacity in Q3.

Web and video conferencing saw a 500% increase in activity since the beginning of Covid.

Apple released the newest iPhone last week.  Google searches for iPhone has seen the lowest levels in at least the last five releases.

Inventory levels of housing are at 3.3 months (the average is 4.5-7.5 months of inventory).  Additionally, mortgage rates remain low, around 3%.  The housing rally will continue as long as rates and inventory are this low. Long-term concern is inflation.  When rates begin to increase, home sales should start to stall.

Eat at home economy.  US grocery sales increased 31% year over year in March, 13% in April, 14% in May, 11% in June, 11% in July and 9% in August.  Home cooking will remain higher than normal as people continue to work from home and the reluctance of some Americans to eat out due to safety concerns.

Boeing ready to take-off?  Europe’s top safety regulator said the 737 MAX is safe to fly.

Retail sales.  The September numbers have popped and that should be good for the economy overall.  Look to October’s retail sales to see if this is an improving trend.

Turn on the spigots!  Trump has indicated willingness to meet any dollar number the Democrats throw out.  This could be a ploy to trap Nancy Pelosi or a pandering to voters leading up to the election.  Still doubtful anything happens prior to the election.  However, it is likely that there will be stimulus this year.  When the Fed pumps in cash, the markets generally do well, “Don’t fight the Fed.”

More good news? Pfizer is hoping for a mid-November approval for its Covid vaccine.

Finally, the rotation to value.  With interest rates at 0%, investors are looking for yield.  Yield is less important than the company’s balance sheet.  Look for well-run companies with solid balance sheets.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

No strategy, such as diversification, can assure success or protect against loss in periods of declining values. Investing involves risk, including loss of principal. Asset allocation does not protect against loss of principal due to market fluctuations.  It is a method used to help manage investment risk.

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