Second half

RYAN   By Guest Blogger Ryan Lewenza

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“It’s tough to make predictions, especially about the future.” – Yogi Berra

I love this quote from famed baseball player Yogi Berra. Over the years I’ve had to make a lot of investment calls and this quote has often come into my mind as I make these predictions, recognizing just how hard it is to consistently make the right calls. This is why I tell clients that if I can go 6 for 10 in our calls and investments that that’s a decent batting average and we can likely deliver on our stated return objectives. Well, since I’m a glutton for punishment, it’s time to pull out my crystal ball and provide my expectations/predictions for the second half and highlight what I expect will be the key drivers of the markets for the remainder of the year.

Here it goes…

First, I believe the equity markets could consolidate through the summer months and trade in a range. For example, I see the S&P 500 potentially trading in a broad range of 2,700 to 3,300 through the summer months. Of course I’ll take the gains if the markets giveth, but I think it would be healthy for the equity markets to consolidate their recent strong gains over the historically weaker summer months. This would allow the markets to rebuild “internal energy” and set us up for a nice year-end rally. After all the crap we’ve had to endure this year wouldn’t that be nice!

Our Expectation for the Second Half

Source: Stockcharts.com, Turner Investments

The first big driver of the equity markets in the second half will, no surprise, be the US/global COVID infection and death rates. We’ve seen a marked increase in US infection rates, in large part driven by surging infection rates in some of the southern states like Texas, Arizona, and Florida. Florida alone hit over 10,000 new daily infection cases this week. Either the virus is moving south or this is the fallout from those state’s looser restrictions and quick reopening plans.

Below is a chart of the number of new reported COVID cases in the US, which after peaking in April, has surged higher in recent weeks. The daily rate has increased to 40,000/day and Dr Fauci this week predicted the potential for 100,000/day of new cases. This is not a good trend at and something we’ll be monitoring closely.

New Reported COVID Cases in the US

Source: NY Times
Next up will be the economic data. We’ve seen a nice turnaround in some key economic releases over the last month and as the economy continues to reopen I see a continued improvement in the labour market and other arears. This week we got the critical US nonfarm payrolls report, which showed 4.8 mln jobs were added in June, and the unemployment rate dropping to 11.1% from 14.7% in March.

Additionally, we saw a huge turnaround is the US manufacturing sector with the ISM manufacturing index jumping from 43.1 in May to 52.6 in June, now indicating expansion in the manufacturing sector. The rebound in the auto sector would have contributed to this nice turnaround in the manufacturing sector with total US domestic auto production falling to 1,800 cars in April, just a tad below the average of 230,000 cars per month.

While it won’t be a straight line, I see the economic data generally improving in the second half and into 2020, which if correct, will be supportive of the equity markets. The key risk to this is the virus and infection rates, so this is no slam-dunk call.

US Unemployment Rate and ISM Rebound in June

Source: Bloomberg, Turner Investments

The third potential driver of the US equity markets in the second half will likely be the US election in November. We covered this in detail in our last blog, where I showed that the S&P 500 has historically done better under a Democratic president (57% average return over the 4-year term), than a Republican president (26%). So if the polls turn out to be right this time and Biden wins, then based on history, this could be a positive thing. That said, I expect some market volatility as we near the election in November, given the uncertainty around who will be the next US president.

S&P 500 Performance under Different Presidents

Source: Bloomberg, Turner Investments

The last key thing I’ll be focusing on will be any additional government stimulus announcements. There is talk of a second round of fiscal stimulus in the US, with proposals for another one-time $1,200 payment to individuals, Trump’s pushing hard for a payroll tax, and some are shooting the idea around of a jobs/infrastructure bill.

I believe all the government stimulus (monetary and fiscal) is one of the key drivers of the equity markets right now. Below I illustrate this overlaying the Fed’s expanding balance sheet and the S&P 500. The Fed’s balance sheet has exploded from US$4 trillion to start the year to now US$7 trillion. For those bad in math, that’s an increase of US$3 trillion in stimulus in just a few months. Incredible! What’s a trillion dollars between friends? And given the strong correlation between the Fed’s balance sheet and the stock market, this may have something to do with the roughly 40% recovery since March.

Fed’s Balance Sheet and S&P 500

Source: Bloomberg, Turner Investments

There you have it. I see US infection rates, economic data, US election and government stimulus as the major drivers for the US equity markets in the second half. It’s going to be a bumpy ride but I see the potential for more gains coming later this year when all is said and done.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

66 comments ↓

#1 dogman01 on 07.04.20 at 10:06 am

Politics = economics = financial consequences. Follow the puck. – Garth Turner

Years ago I discovered this and gave it some thought testing; it is really hard to put yourself in the value perspective of another person.

https://www.ted.com/talks/jonathan_haidt_on_the_moral_mind?language=en

Harm\Care
Fairness\Reciprocity

In Group\Loyalty
Authority\Respect
Purity\Sanctity

More “Liberal” people emphasize the first two, where “Conservatives” play a more balancing act between all five, and still have the first two as the higher measures.

————————————————–
I really like the comments section, but a hell of a lot of work monitoring it.

#2 Andrewski on 07.04.20 at 10:07 am

Thanks for your professional opinion Ryan. Keep an eye on another market dip.

#3 CEW9 on 07.04.20 at 10:14 am

Takes a special kind of courage to put it on the line for all to see, that’s for sure. I appreciate the insight, it a good bit to think on, at least for the little guys like me.

I personally predict no more national lockdowns, anywhere. When lockdowns occur (and do I think they will), they will be small and specifically targeted by state, province, or even county or neighbourhood. With new testing modes a more surgical approach is possible. ie. Calgary is beginning to test sewage for Covid traces to monitor unknown/asymptomatic outbreaks. Countries will do everything they can to prevent further national lockdowns, using them only as a last resort.

Just my 2 cents.

#4 Upenuff on 07.04.20 at 10:25 am

Ryan, nice weekend read with possibly a little light at the end of the tunnel. God bless Yogi Berra or Yogi Bear! Only time will tell……

#5 KNOW IT ALL on 07.04.20 at 10:33 am

The bloodshed of the financial crisis of 2008 has still NOT been resolved.

Income inequality has at the levels of the 1930s.

Governments are know backed in the corner, up against the ropes, the trainer has no other option than to throw money on the fire. Hopefully enough of it can starve the fire of oxygen.

#6 mark on 07.04.20 at 10:35 am

Thanks Ryan,
Always a good read.

Do you not take pause, when the largest hedge fund manger in the world explains what we are currently up against for the next ten years and a lost decade in the stock market, you know who he is, he could be wrong just like anyone, what’s your rebuttal Ryan?

https://www.youtube.com/watch?v=uGMF7Yb4Ikg&t=175s

#7 Shawn on 07.04.20 at 10:36 am

This seems to be the consensus call which I why I think we keep going in Q3 and sell off after the election in Q4. Buy the rumour sell the news. The market had already priced in the current state of the virus. This wasn’t the case in Feb. What everyone knows is not worth knowing.

#8 Shawn on 07.04.20 at 10:41 am

Wayyy to many leading stocks are breaking to ATHs for any consolidation to take place anytime soon. Maybe early 2021?

#9 El presidente has a dream.... on 07.04.20 at 11:52 am

Looking extra roasted…. is smoking man his new speechwriter

https://twitter.com/joekovacjr/status/1279256786017681408?s=19

#10 Scott in Gibsons on 07.04.20 at 12:40 pm

Good prediction based on surface information.
What if the Democrats and their handlers continue to foment unrest and force economic shutdown into the election? This has been happening since Trump won the Republican primary. They won’t stop now. Especially as more is exposed about Obama admin corruption and ties to Gislaine Maxwell horror show. The crooks are cornered and dangerous.

#11 Oakville Rocks! on 07.04.20 at 12:51 pm

Ryan – thanks for the post and sharing your thoughts. I always enjoy the Saturday posts.

Garth, thanks again for this blog, sharing your client calls and doing your best to create a civil discussion in the comments section.

One of the posters whose comments I always thought tried to add to the discussion was SmarterSquirel. He at least has the courage to have his own blog where he posts his investment advice based on his personal experiences.

I understand he chose the wrong day to criticize the mounties but the gist of his remarks were that mountie culture needed to change to allow the overwhelming majority of good police to keep in check their colleagues whose decisions and actions deserve a second look and perhaps a criminal charge. Police like all organizations have their share of cowboys, incompetent and sociopaths. Police are worthy of our respect and trust but they themselves are not above the law or beyond criticism.

Anyway. thanks for doing this and good luck keeping the juveniles in line.

#12 ain't life rand on 07.04.20 at 12:57 pm

@#220 David Hawke on 07.04.20 at 9:30 am
I don’t usually read Sail Away’s comments, however, he has an excellent one today for the comment nay-sayers, do NOT click the comments button, problem solved, EH!

ya, the comments section here is like a car accident – hard not to look.

#13 Trump 2020 on 07.04.20 at 1:31 pm

Trump in a landslide!

Buried deep enough the cadaver dogs won’t have a chance in hell of locating him.

#14 re., dolce vita on 07.04.20 at 1:34 pm

mind-boggling how obsessed this poor guy is about Canada. Writing about Canadian govt debt yet lives in…ITALY. Debt? hahaha. Italy has thrown in the towel

look in the mirror dude

#15 greyhound on 07.04.20 at 1:36 pm

US central bank printed over $2 Trillion in 2 months. Nothing else matters in US markets. Period. As long as the money printing goes on, markets will rise. Until something breaks. Path to riches = figure out when that’s going to happen.

#16 crazyfox on 07.04.20 at 1:56 pm

Of course, the downside to 3 trillion in new public debt, possibly 6 trillion by years end, is that the paradigm has shifted. It was once viewed that higher U.S. debt meant higher international economic expansion and it was so. This public debt implosion we are seeing now is nothing short of a nation hemorrhaging itself to ruin.

Look at the Chinese response to Covid-19 in comparison. Did the Chinese buy stocks to prop up valuations? Of course, it was only too easy for them, most of their financials are government owned and controlled so propping up market valuations is for lack of a better term, easier than to do so in North America but look at all of the other government responses that China did, that the U.S. government is not. Masks, social distancing, hand washing, cel apps, temp guns at stores, banks, mass transit etc., most of this was ignored. The economy was opened up with none of this in place. The central bank stepped up, the rest of governments and partisan followers did not. In short, the U.S. government response to Corona is nothing short of epic fail and numbers back it up. It’s not a fairy tale statement, here, this is a flop.

The leadership vacuum in the U.S. is a dramatic, total fail. Whoever coined the term “zombie market” pegged it right because that’s what we now have. This market is not running on fundamentals leaving the investor to ask the simple question “will we ever see a normal market again?” The answer is yes, of course and it will go down in either one of two ways. The U.S. fed will run out of money or the U.S. dollar will fall from the sky devaluing debt, pushing inflation and causing a depression all at the same time forcing a “normalized market”, or the market will be left to its own devices either because of a true economic rebound, or the U.S. central bank practices frugality before it runs out of money and the market “normalizes” during double digit unemployment and crushed earning cycles leaving one to ask what the chances are for an economic rebound? “Yeah, yeah, this works better” right?

Well, what are the chances of leadership changes in the U.S. ushering forth the right calls against Covid-19? What are the chances of a working vaccine, how long will it last and how widespread will its use be? How will the virus respond, there are 4 strains already, will it be in the teens within a few years? If so (because it is), we can scrap the notion of “vaccine for life”, its a fairy tale for obvious reasons. “we’ve got a vaccine, we’ve got a vaccine!” until of course, the virus mutates and another strain takes its place:

https://www.cnn.com/world/live-news/coronavirus-pandemic-07-02-20-intl/h_fa914077a7e53a9636a144e228865a08

Will there be other class 4 virus’s from, say, the flu family with similar CFR’s (there will) and if so, does our best chance rely on changes to the food supply, and what are the odds of this in a food manufacturing industry that runs the FDA? Where profits are our God, I’m sure that will end well. And what about climate change, that story never ended. All of the issues of security and pollution, they haven’t gone away while U.S. leadership is rudderless. Issues will never go away but, the biggest one of all is the lack of leadership and we couldn’t have had worse. Sorry Republican worshipper’s but its the land of pretend to call what we’ve had something different.

#17 Ryan Lewenza on 07.04.20 at 1:58 pm

Mark “Thanks Ryan, Always a good read.

Do you not take pause, when the largest hedge fund manger in the world explains what we are currently up against for the next ten years and a lost decade in the stock market, you know who he is, he could be wrong just like anyone, what’s your rebuttal Ryan?”

Well I agree that stocks can have lost decades but this is based on secular market cycles. I believe strongly that US stocks go in these secular (long-term) bull and bear cycles that lasts roughly 15 years. For example, from 2000 to 2013 the S&P 500 was flat on a price basis. But in 2013 the S&P 500 made a new all-time high, which marked the start of the next secular bull cycle. Based on history this secular bull cycle should last into 2025 at least. So I see a “lost decade” coming for US stocks but not for another 5+ years. Here’s an article that explains this long-term cycle in better detail. – Ryan L

https://seekingalpha.com/article/4320330-secular-bull-market-to-last-until-2035

#18 Sail Away on 07.04.20 at 2:07 pm

@#220 David Hawke on 07.04.20 at 9:30 am

I don’t usually read Sail Away’s comments, however, he has an excellent one today for the comment nay-sayers, do NOT click the comments button, problem solved, EH!

—————–

As with so many others… resist, resist… but eventually all must fall in line with reason. Good to have you onboard.

Still a few recalcitrants out there…

#19 NewWest on 07.04.20 at 2:08 pm

#10 Scott in Gibsons on 07.04.20 at 12:40 pm

Good prediction based on surface information.
What if the Democrats and their handlers continue to foment unrest and force economic shutdown into the election? This has been happening since Trump won the Republican primary. They won’t stop now. Especially as more is exposed about Obama admin corruption and ties to Gislaine Maxwell horror show. The crooks are cornered and dangerous.

………………………………..

I can see it now – it’s 2060, and Trumpers/far right wing conspiracy theorists will still be blaming every possible perceived wrong on Obama…….

And I thought that under Trump the US had the Best.Economy.Ever?

Give it a rest. Turn off Fox news. Listen to some Mozart, get outside, take up a hobby, cook a good meal for friends. An alternative, much more hopeful, collaborative reality beckons, if you can let go the boogymen.

#20 espressobob on 07.04.20 at 2:14 pm

Investing is more about time horizon than forecasting.

Taking some profit on the way up and loading the truck on the the downside usually proves profitable. Just ask anyone doing so during the GFC, Brexit, or during the current deadly covid thingy?

Nothing scientific about this approach but it always seems to work.

#21 Brian Ripley on 07.04.20 at 2:23 pm

My TSX Indices chart is up with June data for Energy, Real Estate, Financial Services, Gold and the Bank of Canada Commodities in $CAD
http://www.chpc.biz/tsx-indexes.html

Global commodity prices peaked in 2011 but that sector was already in a Canadian Dollar downtrend prior to the July 2008 WTI crude oil peak.

More than a decade of ZIRP and NIRP produced a fantastic inflation in Financial Services and Real Estate which are “paper” assets.

Fundamentally real estate is a wasting asset as strata investors are learning with skyrocketing insurance costs, maintenance labour cost increases, property tax increases and now Covid 19 rent reductions and a dearth of Airbnb prospects takes over.

But who trades on fundamentals? The FOMO crowd has been hooked on Hopium.

Meanwhile the U.S. St. Louis Fed is signalling a period of probable deflation as their metrics hit the highs of their last warning in 2009. Chart here:
http://www.chpc.biz/history-readings/deflation-probability

And apparently only 20% of Canadian households have a net worth of over $1 million
The middle 40% have less than $100k, the bottom 40% less than $50k.

Thanks to BetterDwelling.com for their data table that I have mashed up here:
http://www.chpc.biz/history-readings/household-net-worth

“Real estate and mortgages on that real estate, are the single largest asset and liabilities categories.” June 17, 2020 Parliamentary Budget Office.

Protecting net worth requires risk management; it’s probably too late for the weak hands out there.

#22 FreeBird on 07.04.20 at 2:44 pm

Just read about the rule of 72 again and curious how today’s situation would effect it – if at all. Can also be used to see how inflation effects future spending power. Maybe more of a wild card now? Apparently it actually takes ~70yrs @ 1% compounded to double lump sum vs 72. Ryan, Garth (or Doug/Sinan) can say how smaller amts invested ($ cost avg) vs lump sum can effect the rule or on rule itself. I’m not an expert so I’ll leave it to them.

#23 Xzibito187 on 07.04.20 at 2:53 pm

Im not sure how accurate US employment data is, Pizza Hut and Wendy’s Operator NPC Files for Bankruptcy, one of the largest franchisee of Pizza Hut restaurants in the U.S, you have McDonalds closing its restaurant sections and firing people, and this is just the begging, not to mention last months Canada’s employment numbers didn’t make sense when majority of people who claimed they had a job but admitted to working zero hours. Lets see what happens when the free money ends and people have too make payments. I just met a family who were forced too list their house here in BC, Fraser Valley area because they new that they could not make the mortgage payments once the mortg deferrals end…crazy times

#24 Democracy Is Mob Rule on 07.04.20 at 3:00 pm

#17 Ryan Lewenza on 07.04.20 at 1:58 pm

I see a “lost decade” coming for US stocks but not for another 5+ years. Here’s an article that explains this long-term cycle in better detail. – Ryan L

https://seekingalpha.com/article/4320330-secular-bull-market-to-last-until-2035
————————————————————
The article states “Secular bull market to continue until 2035.” I totally agree the theoretical top to the 35 year American stock market cycle should be in 2035. However, this competes with the 30 year commodity cycle. The upswing in commodity prices is due to start around 2030. This could cause American stocks to top out early around 2032. Then resource stocks should dominate until the commodity peak around 2040. Since Canada is heavily resource based, the TSX should outperform the S&P 500 from 2032 to 2040. The bottom to the 35 year stock cycle should occur around 2044. Therefore the lost decade for US stocks will be 2032 to 2044.

#25 mark wolovetz on 07.04.20 at 3:01 pm

Mark “Thanks Ryan, Always a good read.

Do you not take pause, when the largest hedge fund manger in the world explains what we are currently up against for the next ten years and a lost decade in the stock market, you know who he is, he could be wrong just like anyone, what’s your rebuttal Ryan?”

********************************************
Ryan,
Thanks for your response and the link, so many interesting thoughts and ideas of where we are, and where we are going, thanks for the great information Ryan, enjoy the weekend.

#26 Ryan Lewenza on 07.04.20 at 3:08 pm

Freebird “Just read about the rule of 72 again and curious how today’s situation would effect it – if at all. Can also be used to see how inflation effects future spending power. Maybe more of a wild card now? Apparently it actually takes ~70yrs @ 1% compounded to double lump sum vs 72. Ryan, Garth (or Doug/Sinan) can say how smaller amts invested ($ cost avg) vs lump sum can effect the rule or on rule itself. I’m not an expert so I’ll leave it to them.”

For the Rule of 72 it’s all about the rate of return you ultimately earn. The higher return the quicker you double your money. So it’s less about whether you invest all at once or over stages and it’s all about your rate of return. – Ryan L

#27 FreeBird on 07.04.20 at 3:23 pm

#26 Ryan Lewenza on 07.04.20 at 3:08 pm
—————-
Thx. It’s not a perfect rule but an interesting one.

#28 Grunt on 07.04.20 at 3:28 pm

The don or the biddy?

China : One party one people.
US : Two parties two peoples.

Canadian doesn’t factor a wider event horizon than the neighbor.

#29 Steven Rowlandson on 07.04.20 at 4:04 pm

Covid 19 is just an excuse to print currency, expand deficits and drive small business out of business if possible. The health issue is minor and we can not afford the luxury of a round two of medical martial law.
We will be lucky if we survive round one.

#30 The Awakened One on 07.04.20 at 4:21 pm

Thank you Ryan,

Much appreciate your tips – especially you give it for free! Always enjoy a good read and learning something new from this insightful blog. Stay well, be safe.

#31 baloney Sandwitch on 07.04.20 at 4:22 pm

Ryan, what is your view on inflation. With all this monetary and fiscal stimulus, assets are plumping. Fixed income yield has been devastated. Its TINA time again.

#32 Ignorance Is Bliss on 07.04.20 at 4:25 pm

I am weirded out by the fact my bank hasn’t contacted me about our upcoming mortgage renewal (current term ends Aug. 24th). Usually I would’ve received something in the mail, or a phone call at least….but this year, silence. I’m looking forward to a juicy low rate but currently hubby and I are on CERB. He was in a new job, just a few weeks in, when the place shut down for Covid. He’ll be starting something else soon but is getting his DZ license first. As for me, I work in a library and since it’s only curbside service for now, I’m not needed yet. Hopefully by Sept. should I contact the bank and hope they don’t ask too many questions about our employment, or wait it out?

Our credit ratings are behind excellent. No other debt. Enough cash sitting on the sidelines to pay off the mortgage….however I’d rather invest that.

Advice??

#33 willworkforpickles on 07.04.20 at 4:28 pm

Comment section a bit of an overburden for you?
Then I for one elect to not ever post another comment here again.

#34 Ignorance Is Bliss on 07.04.20 at 4:31 pm

Should’ve said:

Our credit ratings are beyond excellent.
RBC has a “view your credit score” feature in their website…mine shows a score of 886.

#35 Billy Buoy on 07.04.20 at 5:25 pm

Bless you Ryan for STATING THE TRUTH!

“I believe all the government stimulus (monetary and fiscal) is one of the key drivers of the equity markets right now.”

You mean it has little to do with MBA educated financial planners utilizing their endless wisdom?

Like others who have dared in the past to speak such words in the real world, I hope you don’t get let go….

Ryan for PM !

#36 Genesis II on 07.04.20 at 5:35 pm

“…I believe the equity markets [[could]] consolidate through the summer months and trade in a range. For example, I see the S&P 500 [[potentially]] trading in a broad range of 2,700 to 3,300 through the summer months. Of course I’ll take the gains if the markets giveth, but I think it would be healthy for the equity markets to consolidate their recent strong gains over the historically weaker summer months. This would allow the markets to rebuild “internal energy” and set us up for a nice year-end rally. [[After all the crap we’ve had to endure this year wouldn’t that be nice!”]]

Fair to say that you’re optimistically bullish, since you don’t really play the bear case (by shorting). Am I correct?

Secondly, I find it hard to be bullish the general markets given the layoffs and many permanent losses for employment. Aren’t SP500 P/E ratios pricing in that the world will go back to ‘normal’?
I think more likely that we’ll have to endure further until SP500 PE’s average out at 5-7% – which be the bottom of a bear market, as history would suggest.

So, I guess I’m far from being optimistic about the whole thing – but then again, I don’t run a fund as you do!
The Fed can’t support the markets forever, can they?

#37 crowdedelevatorfartz on 07.04.20 at 5:42 pm

@#23 Xzibito187
“I just met a family who were forced too list their house here in BC, Fraser Valley area because they new that they could not make the mortgage payments once the mortg deferrals end…crazy times”
+++

Yep.
And they are the smart ones.
Bailing into a softening sales market….while they still can.

#38 Steerage wisdom on 07.04.20 at 6:21 pm

#24 Democracy Is Mob Rule on 07.04.20 at 3:00 pm
#17 Ryan Lewenza on 07.04.20 at 1:58 pm

I see a “lost decade” coming for US stocks but not for another 5+ years. Here’s an article that explains this long-term cycle in better detail. – Ryan L

https://seekingalpha.com/article/4320330-secular-bull-market-to-last-until-2035
————————————————————
The article states “Secular bull market to continue until 2035.” I totally agree the theoretical top to the 35 year American stock market cycle should be in 2035. However, this competes with the 30 year commodity cycle. The upswing in commodity prices is due to start around 2030. This could cause American stocks to top out early around 2032. Then resource stocks should dominate until the commodity peak around 2040. Since Canada is heavily resource based, the TSX should outperform the S&P 500 from 2032 to 2040. The bottom to the 35 year stock cycle should occur around 2044. Therefore the lost decade for US stocks will be 2032 to 2044.
….

What an epic pile of crap… retrospective pattern hunting is pointless crap that means nothing …

#39 say it aint so jo on 07.04.20 at 6:57 pm

the leading index, the Nasdaq, is relying on less and less stocks to go up. the Advance/Decline line peaked in 2018 and hasn’t made a new high since. Net New hi vs New lows peaked in 2018 and has made lower lows and lower highs.

historically, this is the highest P/E ratio next to the 2000 bubble. 10 day average put/call ratio hit the highest level since 2000 and 2010… only 3 times in 20+ years has there been this much call buying and bullishness.

needless to say, broader indices are far far below their 2018 highs. showing weakness in the general economy.

i’m not that bullish…

#40 Oracle of Ottawa on 07.04.20 at 7:04 pm

Thanks Ryan. Good article. Are you sure your quoting Yogi Berra and not Donald Trump? I always get quotes from those two guys mixed up.

#41 looking up on 07.04.20 at 7:09 pm

#24 Democracy Is Mob Rule on 07.04.20 at 3:00 pm
#17 Ryan Lewenza on 07.04.20 at 1:58 pm

I see a “lost decade” coming for US stocks but not for another 5+ years. Here’s an article that explains this long-term cycle in better detail. – Ryan L

https://seekingalpha.com/article/4320330-secular-bull-market-to-last-until-2035
————————————————————
The article states “Secular bull market to continue until 2035.” I totally agree the theoretical top to the 35 year American stock market cycle should be in 2035. However, this competes with the 30 year commodity cycle. The upswing in commodity prices is due to start around 2030. This could cause American stocks to top out early around 2032. Then resource stocks should dominate until the commodity peak around 2040. Since Canada is heavily resource based, the TSX should outperform the S&P 500 from 2032 to 2040. The bottom to the 35 year stock cycle should occur around 2044. Therefore the lost decade for US stocks will be 2032 to 2044.
….

What an epic pile of crap… retrospective pattern hunting is pointless crap that means nothing …

—————-

Totally agreed. A squiggle on a stock chart is just a squiggle. Double bottoms, ascending triangles, moving average crossovers etc. etc. none of it is consistent or predictable. A load of crap.

#42 NoName on 07.04.20 at 7:54 pm

here is an interesting podcast

https://www.bloomberg.com/news/audio/2020-06-19/jeremy-siegel-on-the-stock-market-and-covid-19-podcast

#43 Ryan Lewenza on 07.04.20 at 8:07 pm

baloney Sandwich “ Ryan, what is your view on inflation. With all this monetary and fiscal stimulus, assets are plumping. Fixed income yield has been devastated. Its TINA time again.”

Yes I see higher inflation down the road from all this money printing but I believe inflation and interest rates will remain low (ie 5 years) for a while due to a number of disinflationary trends. – Ryan L

#44 Gary C on 07.04.20 at 8:58 pm

The FED is the market at this time, take away the punch bowel and it crashes.
Since the market is no longer a reflection of the economy
or a firms earnings, enjoy the ride while you can. I just keep adjusting my stops as I ride the liquidity up, because being retired I do NOT want to ride it down.

#45 CL on 07.04.20 at 9:18 pm

It may be trillions but it’s all monopoly money. The whole monetary system is an illusion.

#46 Dr V on 07.04.20 at 10:09 pm

21 Brian

“And apparently only 20% of Canadian households have a net worth of over $1 million
The middle 40% have less than $100k, the bottom 40% less than $50k.”

Thank you for the link. the report makes an error in the “middle 40%”. It’s actually the 2nd and 3rd quintiles. The middle 40 would be the 3rd quin and the lower half of the 2nd quin and the upper half of the 4th.

Also this group covers NW of 0.1-1.0M.

Interesting that our RE assets are roughly 77% of our
financial assets.

https://www.pbo-dpb.gc.ca/web/default/files/Documents/Reports/RP-2021-007-S/RP-2021-007-S_en.pdf

#47 Ace Goodheart on 07.04.20 at 11:22 pm

I don’t think it’s fashionable to be rich anymore.

Donald Trump was basically the in your face wealth craze taking its final surf on one big wave, before it all crashed onto the rocks.

The new fashion seems to be survival.

Preserve what you have, be ultra careful with every penny, and maintain an outward appearance of frugality, common sense and financial restraint.

The world has come to hate the outwardly rich.

Look poor. It’s the new wealthy.

#48 Upenuff on 07.05.20 at 12:10 am

Ryan, got to say…. Just love your weekend blogs! Always some great incite and comments from the learned peanut gallery! Great read.

#49 Tim123 on 07.05.20 at 1:42 am

I agree with you that we are probably in a range for the S&P 500 of between 2700 and 3300. We are probably at the upper end of the range right now. Most of the investment banks are in this range with CFRA at 3435 as the highest. I am trading the volatility and going long and short with equities and options. I noticed that the rotation between sectors happens fairly rapidly so there are opportunities to go long and short within a week or two. Some of these sectors like airlines, oil and gas, financial services go up and down like a Tokyo. Anyways I am taking profits when they come so hopefully this volatility keeps up.

#50 Chelsea Giodman on 07.05.20 at 5:25 am

Power behind the Fed can’t let Biden win , they’ll smoke him first. Too many trillions printed and borrowed . The massive stimulus has everyone up to their necks in debt. Any proposal from Biden to unwind will be a “Kennedy Moment” for the Dems. But you know what, that might be what they’re planning. They get Biden in by rioting brilliant November, then he gets ‘The Cure’ and whoever he picks as VP carries out the real Dem agenda. Yeah, that’s long shot, and I don’t think anyone can afford a Trump Ouster, but, stranger things have happened. A Niden win could mean a coup has taken place. But watch the price of hip waders, because there’ll be blood in the streets.

#51 David McDonald on 07.05.20 at 6:58 am

I swapped bonds for stocks in March and took the ride up. Now I’m back in cash because the downside risk appears greater than the upside potential to me. Ryan you may be right but I feel safer on the sidelines for now. Thanks for your thoughts.

#52 Bytor the Snow Dog on 07.05.20 at 7:12 am

President Obama. Michelle Obama. You heard it here first.

#53 david prokop on 07.05.20 at 8:08 am

Yogi Berra also said: It’s not over til it’s over
I remain skeptical that the great bear market is over and that it only lasted 5 weeks from top to bottom. We have economic enormous carnage all over the world and stocks are making new all-time highs? The rampant speculative frenzy mostly by retail investors feels more like a Nasdaq 2000 climax rather than the beginning of a new bull market. Time will tell

#54 Ryan Lewenza on 07.05.20 at 8:46 am

David McDonald “I swapped bonds for stocks in March and took the ride up. Now I’m back in cash because the downside risk appears greater than the upside potential to me. Ryan you may be right but I feel safer on the sidelines for now. Thanks for your thoughts.”

To be clear, I also see the potential for volatility and some downside in the shorter term. But given all the stimulus I’m not expecting a major leg lower. Basically we would be buying/adding into weakness given my positive longer term view. – Ryan L

#55 crowdedelevatorfartz on 07.05.20 at 9:05 am

@#46 CLuck CLuck
“The whole monetary system is an illusion.”
++++

Well I’m sure all the economists, govts., banks, and the last 100 years of economic history need a revamp.

You come to a financial blog ….why?

#56 Do we have all the facts on 07.05.20 at 9:07 am

How does a Government decide what, and how many, corporate bonds for their Central bank to buy. They can’t buy them all so there must be a process to select the winners. Is it only companies that make up a stock market index that get government help?

Just curious!

#57 crowdedelevatorfartz on 07.05.20 at 9:08 am

@#53 Bytor the snow blind
“President Obama. Michelle Obama.

+++++

I’m sure , after 8 years under the microscope as “The First Family”….they are enjoying the much more profitable lecture/speaking circuit with a few million dollar book deals tossed in.

#58 Bytor the Snow Dog on 07.05.20 at 9:17 am

#58 crowdedelevatorfartz on 07.05.20 at 9:08 am belches forth:

“@#53 Bytor the snow blind
“President Obama. Michelle Obama.

+++++

I’m sure , after 8 years under the microscope as “The First Family”….they are enjoying the much more profitable lecture/speaking circuit with a few million dollar book deals tossed in.”
—————————————————
Didn’t seem to matter to the Clintons, or the Dems. Power is power after all. More money to be made.

#59 crowdedelevatorfartz on 07.05.20 at 9:32 am

@#59 Bytor the radar is broken.

You had the wrong black celebrity running for Prez.

https://www.reuters.com/article/us-usa-election-kanye-west/rapper-kanye-west-announces-u-s-presidential-bid-on-twitter-idUSKBN24601P

We’ve had a black President.
We’ve had a tv celebrity President.
Why not a black rapper as president?

#60 crowdedelevatorfartz on 07.05.20 at 9:42 am

Think about it Bytor.
Never a dull moment with a Kanye presidency right out of the gate.
Perhaps if Kanye becomes Prez
We could be regaled by the sight of 1st Lady Kim Kardashian at the Inaugural Ball dancing around the floor by herself to the Black Eyed Peas singer Fergie’s
“My humps, my humps, my humps, my lovely First Lady lumps….”

As guests avert their eyes, swallow their adam’s apples and involuntarily break their champagne glasses.

#61 James on 07.05.20 at 9:43 am

Wow. I will be thinking twice about who I order my next pizza from.

Thin crust, pepperoni, and a bit of 1984 surveillance, please.

https://www.thestar.com/news/gta/2020/07/04/pizza-pizza-voluntarily-gave-customers-personal-information-to-toronto-police-without-a-warrant.html

#62 Dharma Bum on 07.05.20 at 9:50 am

I see US infection rates, economic data, US election and government stimulus as the major drivers for the US equity markets in the second half. – Ryan
——————————————————————–

https://www.youtube.com/watch?v=0YppxEYkqTU

#63 Dharma Bum on 07.05.20 at 9:58 am

#48 Ace Goodheart

The world has come to hate the outwardly rich.

Look poor. It’s the new wealthy.
——————————————————————–

As Garth advised right here on this channel:

“Live quietly among the masses.”

#64 kingston boy on 07.05.20 at 10:16 am

@#60 crowdedelevatorfartz on 07.05.20 at 9:32 am
@#59 Bytor the radar is broken.

You had the wrong black celebrity running for Prez.

https://www.reuters.com/article/us-usa-election-kanye-west/rapper-kanye-west-announces-u-s-presidential-bid-on-twitter-idUSKBN24601P

We’ve had a black President.
We’ve had a tv celebrity President.
Why not a black rapper as president?
——————————

could kanye do any worse than t-rump?
guys a bit of a religious nutter but it would be entertaining. gotta love america and their nonsense.

#65 Bytor the Snow Dog on 07.05.20 at 10:17 am

#61 crowdedelevatorfartz on 07.05.20 at 9:42 am sez:

“Think about it Bytor.
Never a dull moment with a Kanye presidency right out of the gate.
Perhaps if Kanye becomes Prez
We could be regaled by the sight of 1st Lady Kim Kardashian at the Inaugural Ball dancing around the floor by herself to the Black Eyed Peas singer Fergie’s
“My humps, my humps, my humps, my lovely First Lady lumps….”

As guests avert their eyes, swallow their adam’s apples and involuntarily break their champagne glasses.”
——————————————-
So Idiocracy WAS a documentary!

#66 27LEAF99 on 07.05.20 at 12:56 pm

@#32 Ignorance Is Bliss – if you did not receive any info from bank, contact bank, set up appointment or find a new bank. Be assertive.