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Market Commentary: Week of July 13, 2020

What Happened:

Despite worsening COVID news, stocks—particularly tech stocks—managed to explode higher for the week with the NASDAQ hitting another all-time high on Friday. Nationwide, daily COVID cases rose to 60,000 per day with Texas, Florida, Arizona, and California leading the way. If this looks familiar to last week’s market summary… it is! We just replaced “holiday-shortened week” and instead of 50,000 COVID cases a day, we are now at 60,000.

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Gravity is Gone

“So I'll meet you at the bottom if there really is one
They always told me when you hit it you'll know it
But I've been falling so long it's like gravity's gone and I'm just floating.” –
Drive By Truckers

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Market Commentary: Week of July 6, 2020

What Happened:

Despite worsening COVID-19 news, stocks managed to explode higher for the holiday-shortened week with the NASDAQ hitting another all-time high on Thursday. Nationwide, daily COVID cases rose to 50,000 per day with Texas, Florida, Arizona, and California leading the way. In response, all four states rolled back a fair amount of their economic reopening plans. To some degree, we are seeing the worst-case scenario where we start reopening, virus transmission picks back up, and we have to shut it down again.

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Market Commentary: Week of June 29, 2020

What happened:

Last week was the first real “risk-off” week in quite a while. COVID-19 has pounced on some of our largest population centers that began relatively aggressive economic re-opening campaigns in mid to late May. Florida, Texas, Arizona, and California dominated the headlines, as it certainly appears that the so-called “First Wave” of the virus has not ended yet. The equity and corporate bond markets have banked heavily on the V-shaped recovery and what we are seeing is, the United States is not ready to materially reopen the economy without significant public health damage.

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Market Commentary: Week of June 22, 2020

What happened:

Last week, stocks spent the days grinding back after the prior week’s late selloff. Treasury rates were mostly unchanged as were investment grade and high yield bonds. Risk assets just seemed to want to go up, more or less ignoring the rising COVID hospitalization numbers in Florida, Texas, and Arizona to focus more on talk of a new infrastructure package from the White House and more enactment from the Fed’s Secondary Market Corporate Credit Facility (SMCCF).

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Trying to Understand the Stock Market/Economic Disconnect? Stop.

From the great cult classic movie “Big Trouble in Little China,”

Jack Burton – “I don’t get this at all?”
Lo Pan – “Shut up Mr. Burton! You were not brought upon this world to get it!”

As U.S. equities continue their relentless march higher, the question reverberating from all corners of the investment world is, “How can the stock market completely decouple itself from economic reality in what is really just the first couple of innings of the COVID crisis?”

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Market Commentary: Week of June 15, 2020

What happened:

It was another turbulent week; stocks continued their strong and somewhat puzzling run toward erasing the sharp losses suffered in February and March. The main event of the week was the Fed’s FOMC meeting sobering pronouncement that FOMC members saw a very slow recovery filled with chronic unemployment until 2022. Not exactly a “V-shaped” recovery.

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The Adventures of Jerome Powell

We have to hand it to The Federal Reserve; what they have managed to do with the investment-grade and high-yield bond and loan market has been remarkable. Back in March, they announced a Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity to frozen markets. They would use this facility to buy investment-grade corporate bonds, high-yield corporate bonds that were investment-grade prior to March 20, 2020, and investment-grade ETFs. The U.S. Treasury provided $25 billion in capital, which meant that the Fed could buy about $250 billion.

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Market Commentary: Week of June 8, 2020

What happened:

The week was dominated by some of the biggest protests and civil unrest throughout the country since the late 1960s. Stocks held a positive tone against adversity and then went ballistic when a shocking May BLS employment report came out Friday. The report showed a LOWER unemployment rate and a 2.5 million job GAIN, versus estimates of a 7.5 million job LOSS!

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Market Commentary: Week of June 1, 2020

What happened:

It was an action-packed week with regard to outside market events. After the Chinese Legislature passed laws that essentially put Hong Kong under the same national security laws as Mainland China, President Trump reacted by removing Hong Kong’s special trade status. Additionally, the President announced that the United States will no longer fund the World Health Organization under the accusation that it is overly influenced by China and it aided and abetted China in covering up COVID-19. Naturally, this is a negative for US-China trade relations.

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