All Time Highs

August 31, 2020

Market Update 2020-08-31.

Equity markets rose last week with the S&P 500 reaching the 3,500 mark for the first time, rising 3.3% last week on Chairman Powell’s dovish comments that the “Fed will run the economy as hot as possible to lift inflation moderately above the 2% target.” Basically, after 30 years of being wrong on fearing higher inflation, the Fed has now caved to the notion that 2% was easily attainable and the “magic number.”  The SP 500 index sits at a new all-time high which is normal after a summer rally off a V-bottom. Timing wise, the “summer rally,” that started on cue around June 26 to 28, should be coming to an end here with an ebb in price momentum and pullback potential for around two months. This should become a buying opportunity for a stronger economy in Q4 2020 through 2021.

Mixed economic data

The economic data is starting to become more mixed with the economic surprise index plateauing here on the back of rising ISM production supported by higher demand and lean inventories being offset for now by a rise in unemployment applications.

After declining positive test counts over the last 5 weeks, as forecast by research house Fundstrat, the virus counts are starting to rise again on the back-to-college and back-to-school cases.  The betting odds of a President Trump repeat win in November have skyrocketed in tandem with the plunge in virus cases and upturn in the economy. Just as important to conservative voters, the odds of the GOP holding the Senate, regardless of presidential outcome, have also improved dramatically.  I like to follow the betting odds and what people do with their money, which can be viewed here.

Resources

  • Our complete second half outlook has been also posted and can be found by clicking here.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. Data, Articles, and information cited are believed to be reliable at the time of creation, but are not guaranteed. Nothing in this content is intended as, nor should it be regarded as, personalized investment advice. Strategies and ideas discussed may not be right for you.  Views and opinions expressed may change without notice and do not constitute a recommendation, or an offer or solicitation to buy or sell securities. In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Indexes are not available for direct investment and your results may differ. Past performance is not indicative of future results. Investing involves the risk of loss.