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A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Today's sell-off it a convergence of a lot of stuff that's been building up. It now feels like February into March. He's got put options out there and built up hedges. There are 46 days till the US election. He sees vulnerability to the downside. The catalysts for the recent tech sell-off: valuations went through the roof and central banks issued stimulus and governments offered fiscal stimulus to pump markets. Now, that stimulus is off the table. And the US election is coming up.
COMMENT
Recent market activity has nothing to do with seasonality. The speculative bubble with small traders, options market and hedging have come unwound. The market did not like the fact the Feds did not commit to more quantitative easing.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
He hopes that Feds never start buying equities. Japan has been buying equities for years and that has not helped. The market is now testing the froth and they will correct until the Feds steps up.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Bonds. With interest rates so low, bonds now are yielding very little. There is virtually no return after inflation. It is a problem for retirees. The central bank is also seeking more inflation, which is a big problem for bonds. Dividend yielding stocks are okay to replace bonds only if you can handle volatility.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Volatility. The stock market is not reflecting what is going on in the real economy. This is largely due to central bank stimulus and speculation. The froth is coming off, but how low it goes is hard to say. He does not think there will be a major recession however. The correction may last a couple months, especially with election uncertainty.
Larry Berman CFA, CMT, CTAUnknown
COMMENT
Educational Segment. The death of RBG is the latest wrinkle in the US election. There is litigation against the Republicans making it difficult to vote. There were negotiations for a support plan, but the new appointment issue will be the new focus. This means there might be no stimulus bill before the election. There may be testing at around half of the market rally.
COMMENT
Billy Kawasaki’s Insights - Picks from 5i Research. Today’s sell off most likely comes from concerns over increasing virus numbers in Europe. There is also a shift out of tech stocks which has been a trend in the last couple weeks. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Forget about a lack of further stimulus; there could be a US government shut down next month. Small businesses in restaurants and bars need financial help the most. Many will go out of business. Airlines and the travel sector also need a bail-out. House-buying is booming, but apartment renters are sinking. With the US election looming and Trump threatening to immediately replace Ruth Bader Ginsburg on the Supreme Court, there are jitters among investors, enough that he urges them to hold (not sell) stocks.
COMMENT
The Covid trade We're seeing the Covid trade now, as 17 states see an uptick in cases. Buyers sell anything remotely related to a lockdown, namely bars and restos (Dardens), and buy stocks that, say deliver good, like Dominos, or fill your pantry like Campbell's. Walmart and Amazon will be able to sell online and thrive. Square and Paypal will be used by small businesses. Cybersecurity like Palo Alto are also buys. The stay at home stocks that have been working will continue to do so. We've been through this pattern twice and will continue until a vaccine emerges.
N/A
The biggest takeaway from the OPEC meeting was the Saudis implementing penalties for those who are cheating. The market's lack of confidence for normalization of oil demand is driving the price. Supply is down more than demand loss. In a year or two, there may be a supply crisis.
Eric NuttallUnknown
COMMENT
The current rash of tech IPOs Red hot tech IPOs are killing us, because investors are piling into them, but selling off the tech stocks and pressuring overall markets. New stock is overloading demand. Unity today soared 31% in its IPO today, for example. Some buyers dropped Salesforce and FAANG names, hence the decline in those tech stocks.
COMMENT
Billy Kawasaki’s Insights - Picks from 5i Research. The announcement from the Federal Reserve stating that interest rates are to stay low for a while will likely be positive for gold and stocks. Q2 results were pretty good and it should remain strong when the world reopens. The "anything is better than cash" mentality from low interest rates is likely to stay for a while. Unlock Premium - Try 5i Free
Stockchase InsightsUnknown
COMMENT
Strategy on oil. Two dynamics at work, inflation and growth, and those dynamics cross and you get 4 regimes. Different asset classes respond differently to the different regimes. Oil does well in rising inflation or accelerating growth. We've had a significant increase in liquidity to fight the pandemic. If suddenly there's a vaccine, commodity prices could take off and overwhelm the opportunity for the economy to grow. So, have a balanced portfolio across the 4 regimes. Make sure it hasn't been thrown out of whack by the disinflationary boom where large tech stocks have come to dominate the market indices.
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