Today we found out that roughly 21 Million people were unemployed as of May, and we know almost all of those came in the last few months. CNBC seems to think there is room for optimism, and while I agree that in the long term the US market will recover, I think short term optimism might be a tad ambitious. I love how there is commentary out there that it’s a positive signal that most unemployed people have not been unemployed long; of course they haven’t, everything turned upside-down just a few months ago. Add to that declining GDP models and things could seem pretty sour…
I am by no means a skeptic of the US economy or the opportunity for it’s continued growth, but rather I accept that something unprecedented happened, and things might take a long time to get better. My job, as an advisor, is to help clients navigate that ‘getting better’ time. Markets will go up and down, occasionally crazy things will happen, but by and large staying calm (and diversified) is going to be your best bet for weathering this storm.
Now, on to the markets. Aside from the Nasdaq, every other major domestic and international market had a down day, perhaps in response to unemployment data, or perhaps just a respite from recent gains; I am not sure anyone actually knows.
In a change from the past weeks, Momentum and Growth stocks were the best stocks on the day while Value and Small Cap stocks lagged. I know most everything was down today, but this is an interesting flip in the markets from the past few weeks.
To remind you, however, it has been a Growth and Momentum stock dominated market this year, so maybe the last few weeks have been the aberration.
On the fixed income side, things continue to normalize after the shock in late March that devastated many funds focused on more marginal credit securities. These funds have yet to recover fully, but have gained significantly from their lows.
As I mentioned in my weekend update, today was a day to gauge luxury stocks as Movado ($MOV), Tiffany’s ($TIF) and Signet ($SIG) reported. They all had crummy quarters, and Tiffany’s and Signet missed earnings or revenues by big margins. Markets were much less forgiving of Signet than Tiffany’s. What this bodes in the long term, who knows, but it does send a confirming signal about the drop in high-end consumer demand due to Covid19.
In happier news, here is an article about how recent market moves may be the sign of a new bull market!
Stay safe.
Nathan
