We hope this finds you well and staying safe. We're all learning to adjust and live our lives in the time of COVID.
Last week was a strong one in the equity markets, as the NASDAQ posted another all-time high and the S&P closed in on its February peak:
A full recap is linked below for your reference. Please consider reading it at your leisure.
Equities continued to march higher, powered mainly by Facebook, Apple, Amazon, Microsoft and Google. This has been a recurring theme, as has the market's tendency to shrug off bad news: social unrest and the current political stalemate with respect to another relief package. The economy added more jobs than expected in July, and the unemployment rate dropped to 10.2% (also better than expected). Unfortunately, different parties will probably read what they want into those figures, and it may not sharpen their sense of urgency to get a fiscal deal completed.
The longer the American economy languishes without a relief package, the more damage is done to both the economy and our social construct, because of COVID's disproportionate impact on minorities.
The U.S. economy is remarkably resilient, as some of the July figures attest. That resilience is rooted in its flexibility, which allows capital to be reallocated quickly and effiiciently... but that dynamic also produces winners and losers. Corporate earnings for the second quarter have been coming in well ahead of firms' previously-lowered guidance, but bankruptcies are also picking up steam. The liquidity-fueled rally we're enjoying courtesy of the Federal Reserve is not going to last forever, and will not be as impactful as failures accelerate.
In sum, we need our leaders to look forward, not backward, and to act with wisdom and conviction. We're all counting on them, at least to some degree.
Thank you for the confidence you have placed in us. It's a challenging time but we're gratified to work through it with you.
All the best,
FMA ADVISORY, INC.