Daily Covid and Markets - Wednesday August 5
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 5 August 2020
⏱️ 17 minutes
🔗️ Recording | Apple Podcasts | RSS
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Summary
The market rallied 375 points today, again closing at its highest point of the day as late trading added momentum to the market. Clearly expectations are high for a stimulus deal, there was a bit of curve widening helping banks today, and earnings season was substantially better than had been anticipated. I would love to credit the vastly improving COVID picture with some of the Dow move higher, but the COVID challenges this summer didn’t do much to harm the market, so I don’t think one can have it both ways.
(Note the time ledger on the Dow chart; I started today on the eastern time zone but closed the day on pacific)
The ADP jobs report did show 167,000 new jobs month over month, but one would think the number would be higher given the losses of the lockdown. The strong comeback number in June versus this more tepid comeback number in July seems to indicate a slowdown in re-hiring, not surprising given the policy measures taken in July.
As is often the case, I can’t explain why but today’s missive has been one of my favorite to prepare.
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.4 | Hello and welcome to today's COVID and markets podcast brought to you by the Dividend Cafe of the Bonson Group. |
| 0:18.3 | And if I sound a little bit different, I don't know, maybe |
| 0:21.2 | it all sounds the same, but I'm back in the studio at our office in Newport Beach. And so |
| 0:27.6 | typed a good portion of today's covenomarkets.com from New York City early this morning and then |
| 0:34.4 | on the airplane after that. And now I'm in the office and recording the podcast. |
| 0:38.2 | So what a difference a day makes. |
| 0:40.5 | But it was a quite interesting day. |
| 0:42.1 | The market rallied significantly. |
| 0:44.1 | Dow was up 375 points. |
| 0:46.6 | Both the NASDAQ and S&P were up, but not as much as the Dow. |
| 0:51.5 | So here's my little take on that. |
| 0:53.4 | Let me make a couple of market comments and we'll get into the COVID health stuff. The expectations, I think, are very high in the market that a stimulus deal is going to come. And the politicos are not doing much to talk that down. Every time one of them is saying we're far apart from a deal, they continue to say we're |
| 1:11.2 | confident a deal isn't going to get done. And so I think both because of just the sort of natural |
| 1:16.7 | gravitational expectation that a deal will get done, the market is wanting to price a lot of that |
| 1:22.1 | in. And then just rhetorically, the politicos are saying something's going to get done. So I think the market |
| 1:28.7 | finds it kind of inconsiderable, I should say, that a deal wouldn't get done. So you may have |
| 1:35.6 | some of that getting baked in. The yield curve widened a bit today. I think that added some |
| 1:40.1 | boost to the banks and some of the financial stocks. And then, you know, we're near the very end of it now, but I don't know why more aren't |
| 1:49.1 | kind of admitting that the earnings season overall was substantially better than have been |
| 1:54.4 | anticipated. |
| 1:55.2 | And maybe that is being sort of demonstrated just through market prices, but the reality |
... |
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