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Entries for 2020

A Healing Job Market

 August 15 2020     David Templeton
With over 15 million individuals unemployed based on Thursday's jobs report and an additional 10.7 million individuals receiving Pandemic Unemployment Assistance, labor market improvement can not happen fast enough. However, employment related reports this past week indicate the job market is improving. Initial jobless claims for the week ending August 7 were reported at 963,000, a far cry lower t...

Economic Tailwind Contributing To Favorable Equity Market

 August 14 2020     David Templeton
In a number of my recent blog posts I have written about the "V-shaped" recovery unfolding in both the equity market and the economy. Economic data reported over the last two weeks continues to support this V-shaped narrative. Much of the recent economic releases are positive and the data, when plotted on a chart, trace out a V-shaped pattern as well.Last week the New Orders Index reported by the ...

VIX/VXV Level Warrants Investor Attention

 August 2 2020     David Templeton
July's return for the S&P 500 Index of 5.64% pushed the index into positive territory for the year, returning 2.38% year to date. More impressive is the S&P 500's return since the March 23 low at +46.2%. It is hard not to agree there appears to be an upward bid to the equity market in spite of concerns around the virus induced weakness in some of the economic data, especially in the jobs/employmen...

Market Climbing A Wall Of Worry: Weakening Bullish Investor Sentiment

 July 30 2020     David Templeton
AAII reported bullish investor sentiment fell 5.83 percentage points to 20.23% in the Sentiment Survey release today (7/30/2020.) This is the lowest bullishness reading since bullish sentiment was reported at 17.75% on May 26, 2016. The Sentiment Survey is derived from AAII's requests of its members to report their expectation about the stock market's direction in the upcoming six months.Sentiment...

An Economic Tailwind Would Be Favorable For Stocks

 July 26 2020     David Templeton
With the consumer accounting for nearly 70% of economic activity, this past week's jobs report came in on the disappointing side of the ledger. With state governors continuing to pause some reopening of their respective states, it is not a surprise that the jobs report disappointed. Claims on a non-seasonally adjusted basis fell, but declined less than consensus expectations. The bigger issue in m...

Strong Rebound In The June NFIB Small Business Optimism Index

 July 14 2020     David Templeton
I still believe the recent economic data is experiencing a "V-shaped" recovery and the equity market seems to concur. So many times though, we do note the market and the economy do not always react to the same information. With the S&P 500 Index's 1.34% gain today, it is now up .40% on the week. Over the last eight trading days the market is up 6.14% since June 29. If the market finishes positive ...

Mutual Fund And ETF Flows Don't Favor Stocks

 July 10 2020     David Templeton
As is said from time to time, a picture is worth a thousand words and one simply needs to look at mutual fund and ETF flows to see the truth behind the statement. Investors' actions indicate stocks have not been at the top of their buying list for a year and a half. As the top two panels in the below chart show, cumulative mutual fund and ETF flows for stocks have been decidedly negative for a yea...

Summer 2020 Investor Letter: A "V-Shaped" Market Recovery

 July 9 2020     David Templeton
The speed of the market decline in the first quarter was unprecedented and the ensuing recovery in the second quarter was as impressive as the gut-wrenching decline in Q1 2020.Our Summer 2020 Investor Letter contains commentary on the economic and market impact precipitated by the virus mandated shutdowns. With the third quarter underway it seems the worst of the economic damage caused by the viru...

The "V-shaped" Recovery Continues: Now It Is The ISM PMI and Non-Manufacturing Index

 July 6 2020     David Templeton
I have noted in a few recent posts that much of the economic data being reported is recovering in a "V-shaped" manner. In other words the economic rebound taking place as states are reopened and businesses get up to speed is occurring at a strong clip. Today's ISM Non-Manufacturing Index report came in at 57.1%, an increase of 11.7 percentage points over May's 45.4% reading. ISM noted this was the...

A Healing Job Market And Economy But Poor Investor Sentiment

 July 2 2020     David Templeton
It is hard not to look at much of the recent economic data and not come to the conclusion a V-shaped recovery seems to be unfolding. Certainly many of the reports are coming off depressed levels; however, a sharp recovery is occurring nonetheless. Today's nonfarm payroll number is another example with a month over month increase of 4.8 million versus a consensus expectation of 3.0 million increase...
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