Published
9 months agoon
Good morning, Bull Sheeters. Stocks are—shocker!—trading lower this morning even with the promise of more stimulus spending in the works. There’s data too showing the U.S. economy is not in such a dreadful state. The weak start to the trading day is a mere blip in what’s otherwise been a record two-month run in equities.
Let’s check in on the action.
From Japanese bluechips to American small-caps, stocks are having a bull run for the ages. Growth stocks and cyclicals are on fire, and that’s despite economic data showing record job losses and a collapse in growth.
As we’ve discussed many times here in this space, the stock market is seeing a V-shaped recovery while the global economy is seeing anything but.
This disconnect can also be seen in the mindset of the investor. Allianz released its latest quarterly survey of investors late last week, showing there’s still plenty of concern about the COVID-19 impact on portfolios and on the wider economy. Take a look at this morning’s chart.
Nearly two-thirds of respondents believe we’re entering not just a recession, but a major recession. And another 58% see COVID having a negative impact on their retirement plans. Oh, and 54% believe the market has yet to hit bottom.
Now here comes the disconnect. The same investors are suffering a big case of FOMO. A fairly significant number don’t want to miss out on this incredible bull run, as the next chart (pulled from the very same Allianz survey) shows.
Allianz asks the survey panel every quarter whether now is a good time to invest. There’s been a big jump in those responding in the affirmative in the latest quarter, as the chart above shows. It’s still in the minority, but the more bullish trend is worth noting.
So how is it that there are both fears of a mega-recession and a fear-of-missing-out mood hanging over investors? I’m picturing the proverbial angel-on-one-shoulder/devil-on-the-other gripping investors as they see all traditional economic indicators of a healthy economy—employment, GDP— crash, and the markets soar.
So I open it up to the Bull Sheet community: do you see conflicting signs as it pertains to the future of your portfolio and the future of the economy? More to the point, does it even matter?
Shoot me a line, if you have a moment. I’m curious to get your take.
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Have a nice day everyone. I’ll see you back here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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