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Chart Title	Date
Cryptocurrencies compute big gains	1/8/2021
US, Asia stocks gain; Europe falls	12/31/2020
2021 earnings dilemma	12/18/2020
Tech still leads pandemic performance	12/11/2020
US elections and volatility	11/27/2020
Vacation plans	11/20/2020
A surprise for investors	11/13/2020
US stocks at a glance	11/6/2020
Season of change?	10/30/2020
Murky Q3 revenue growth	10/23/2020
Materials, tech have most foreign exposure	10/16/2020
Airlines mostly grounded	10/09/2020
Tech tilts even stronger vs. energy, financials	10/02/2020
Retail sales warning sign?	09/25/2020
Record Fed buying	09/18/2020
Contrarian indicator	09/11/2020
US corporate profits fall	09/04/2020
Watching housing	08/28/2020
Oil prices stabilize	08/21/2020
ESG wins	08/14/2020
Can earnings support stock prices?	08/07/2020
COVID-19 crushes government revenues	07/31/2020
Home prices keep rising	07/23/2020
30-year rate falls	07/17/2020
Stocks rock back and forth	07/10/2020

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Cryptocurrencies compute big gains

Most of the largest cryptocurrencies by market capitalization—including Bitcoin, Ethereum, Tether, Litecoin, XRP, and Polkadot—had significant price gains in 2020. Investment commitments from a number of well-known hedge fund managers and other major investors is a stark difference between the cryptocurrency market of today and that of 2017, which was the last year cryptocurrencies saw abnormal returns. A lot of uncertainty remains for this highly volatile market, with potential regulatory changes being among the most important.

Source: FactSet, as of January 3, 2021.

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US, Asia stocks gain; Europe falls

The 3 largest economic regions of the world collectively plummeted as the COVID-19 pandemic unfolded in early 2020. Asian and US markets (as measured by the MSCI Asia Pacific Index and the S&P 500 Index, respectively) will end the year with double-digit gains, while European stocks (as measured by the Stoxx Europe 600 Index) will finish the year in the red.

Source: Bloomberg, as of December 29, 2020.

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2021 earnings dilemma

Share buybacks declined throughout 2020—as might have been expected, given that earnings growth (which tends to be the primary source of funds for companies to buy back their own stock) declined broadly during the year with the COVID-19 pandemic. The following chart is from a recent market commentary by Jurrien Timmer, director of global macro at Fidelity. It details the 12-month trailing amount of buybacks per share, as well as the overall payout ratio (i.e., dividends plus buybacks). Given a potential decrease in the payout ratio and a modest rise in the discount rate (along with some other assumptions), Timmer questions whether the market will be able to produce robust gains in 2021.

Weekly data as of 11/29/2020. Source: Bloomberg, FMRCo.

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Tech still leads pandemic performance

2020 will almost certainly be remembered as the year of the COVID-19 pandemic. For investors, it’s been yet another reminder of how quickly things can change, as well as how important it is to understand a company’s business, its positioning in the marketplace, and how it can or cannot adapt to the unexpected. The chart below depicts the S&P 500’s industry group performance since mid-February of this year. The top performing groups include tech hardware, retailing, semiconductors, and autos & components—all of which are up more than 20% since the early days of the COVID-19 outbreak. On the other end of the spectrum, energy, banks, real estate, and insurance have performed the worst among S&P 500 industries.

Source: Strategas, as of 12/05/2020. Data since February 19, 2020.

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Vacation plans

Tourism and travel are significant parts of the US and global economies. Obviously, COVID-19 has wreaked havoc with vacationers’ plans. According to the most recent Consumer Confidence survey, vacation plans among Americans have improved dramatically since the nadir earlier this year, but still remain well below prior levels. The recent spike in coronavirus-related infections and hospitalizations may have a negative impact going forward.

Source: The Conference Board, FactSet, as of November 15, 2020.

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A surprise for investors

After surging to an all-time high, the Citigroup Economic Surprise Index—which attempts to measure how much worldwide economic data is surpassing expectations—has course-corrected a bit. However, it has still remained positive. This despite some geopolitical uncertainty and a potential “second wave” of COVID-19 that continues to weigh on global economies.

Source: Citigroup, as of November 8, 2020.

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US stocks at a glance

The US election was yet another event in a year that has been marked by change. Yet since the beginning of 2020, several global markets are little changed year to date. Here’s how the US market has performed in 2020 thus far.

In the chart above, the green line is the S&P 500, the black line is the 20-day exponential moving average, and the blue lines are the outer moving average envelope. Source: Active Trader Pro, as of November 5, 2020.

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Season of change?

Several significant market-influencing factors are in flux, ranging from geopolitics to the COVID-19 pandemic and even the weather. Amid the uncertainty, investor sentiment has broadly turned bullish, according to an indicator. US stock market bulls exceeded bears for the first time since February in the latest US investor survey from the American Association of Individual Investors. Looking into the details of the survey, optimism rose slightly (although it is still below its historical average) as did neutral sentiment, and pessimism declined.

Source: American Association of Individual Investors, Bloomberg, as of October 25, 2020.

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Murky Q3 revenue growth

Compared to the 3rd quarter of 2019, revenue growth for the S&P 500 is expected to be down more than 4% in the 3rd quarter of 2020, according to consensus estimates. The expected decline is attributable, in large part, to a forecasted 34% revenue drop for energy stocks and 19% decrease for industrial stocks. On the flip side, health care stocks are expected to see 8% growth compared to the same quarter last year.

Source: Refinitiv, Strategas, as of October 15, 2020.

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Materials, tech have most foreign exposure

As you are building and managing your mix of investments, a factor to think about is where a company has exposure. For example, the chart below highlights the percentage of foreign revenues for each of the 11 US stock market sectors of the S&P 500. US materials and technology stocks generate well over half of their revenue in foreign countries, while utilities generates almost no revenue abroad.

Soruce: Strategas, as of October 12, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Airlines mostly grounded

Airlines are among the industries that are still struggling to recover, as air traffic remains well below pre-COVID-19 levels. In the US alone, tens of thousands of furloughs and layoffs went into effect last week, prompting renewed efforts by some members of Congress to accelerate relief talks for the beleaguered industry. Many analysts expect that, without a federal bailout, there will be a rash of US airline bankruptcies in the coming months, and that international carriers may be in an even worse predicament.

Soruce: International Air Transport Association

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Tech tilts even stronger vs. energy, financials

The gap between the weight of technology stocks and both energy and financials stocks combined in the S&P 500 could soon surpass the peak ratio from the dot.com era. The market dynamics of COVID-19 have accelerated the trend of technology stocks, consuming even more space in the market (while energy in particular has been shrinking at a rapid pace) since 2007.

Source: Bloomberg, as of September 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Retail sales warning sign?

Nearly 70% of the US economy is consumer spending, which is why monitoring retails sales is such a critical input for the health of the economy. Retail sales fell off a cliff at the outset of the COVID-19 pandemic. In recent months, retail sales recovered their pre-COVID level, however; the pace of growth has slowed substantially. August US retail sales rose a sluggish 0.6% month-over-month. While that is the 3rd straight month of growth, it was just below estimates. Moreover, there is growing concern that the reopen boost may continue to diminish as federal aid ends for the unemployed and struggling businesses.

Source: Strategas, as of September 19, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Record Fed buying

The Federal Reserve has bought more than half of $1 trillion in mortgage-backed securities (MBS) since March. That is a record pace for just over 6 months, surpassing previous quantitative easing (QE) efforts by the US central bank. Before the coronavirus outbreak, the Fed had begun to unwind some of its holdings in 2018 and 2019. But the US central bank quickly reversed course as the magnitude of the pandemic unfolded, as this QE measure has been among the most substantial actions taken by the US to blunt the negative economic impact of COVID-19.

Source: Bloomberg

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Contrarian indicator

The total options put-call ratio has fallen alongside stocks rallying to new highs since the March COVID-19 US market low. Most chart users utilize the put/call ratio as a contrarian indicator: When investors appear broadly bullish or bearish when this ratio is at extremes, they take the opposite view. Basically, a contrarian is betting against the crowd. When this ratio is over 1, put volume exceeds call volume. Conversely, when this ratio is under 1, call volume exceeds put volume. Currently, it is around 0.5, which means that call volume exceeds put volume. A contrarian might interpret this ratio as the US market having risks to the downside.

Source: FactSet, as of September 6, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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US corporate profits fall

While stock markets are rallying to new heights, corporate profits have not reflected that reality. Coronavirus has dramatically slowed US corporate profits both before and after tax, with the pace of decline outstripping that of the drop seen during the financial crisis of 2008. Corporate income taxes had already been trending lower since 2015.

Source: FactSet

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Watching housing

Given how important housing is to the financial system, investors may want to monitor how COVID-19 is wreaking havoc on Americans' ability to afford their homes. The percentage of people who missed their July rent or mortgage payment (and do not believe they will be able to make the August payment by month end) varies by state, but is significantly higher across the country relative to pre-COVID levels.

Source: US Census Bureau, Household Pulse Survey.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Oil prices stabilize

Demand for energy fell off a cliff earlier this year amid worldwide economic shutdown efforts aimed at combating the virus. While oil prices are still below price levels from just a few months before the COVID-19 outbreak, they have since recovered much of those losses. A multimonth chart shows that they appear to have stabilized near $40 per barrel. Recall that a contract of West Texas Intermediate (WTI) crude oil briefly fell below zero (buyers had to pay sellers to store the oil) for a short time back in April (this contract price not depicted below).

Source: FactSet, as of August 19, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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ESG wins

Over the past year, European stocks with the highest environmental, social, and governance (ESG) ratings have beaten the broad market, mostly thanks to their performance since the COVID-19 bottom set in March. This might suggest that investors broadly have thought companies with better ESG ratings have attributes that may help them better navigate current market conditions and/or a new normal, to some extent.

Source: Bloomberg, MSCI, as of August 6, 2020. Data is normalized as of 8/6/2019. MSCI Europe ESG Leaders Index is a capitalization weighted index that represents large- and mid-cap companies across 15 developed markets with high ESG performance compared with sector peers. MSCI Europe Index represents large- and mid-cap companies across 15 developed markets in Europe.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Can earnings support stock prices?

While the initial shock of COVID-19 appears to have worn off from the perspective of many investors around the world, new confirmed cases remain near all-time highs as economies continue to try to reopen. Questions remain as to whether earnings can support the 4-month-long rally for global stock markets from their low point in March. Looking at the S&P 500, forward earnings per share (EPS) has lagged the stock rebound substantially.

Source: Bloomberg, as of August 2, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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COVID-19 crushes government revenues

As of July 26, there have been over 16 million confirmed COVID-19 cases worldwide, with over 642,000 deaths, according to data from Johns Hopkins University. With no vaccine or treatment available yet, these numbers will continue to rise sharply for the foreseeable future, given the growth in new confirmed cases in Brazil, the US, and many other parts of the world. The economic effect continues to remain unknown. In the US, 2021 revenue loss estimates for state and local governments—which employee millions of people—could be staggering.

Source: Strategas

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Home prices keep rising

One indicator says US home prices continue to rise. The S&P CoreLogic Case-Shiller Composite 20 City Index has shown no signs of weakness, even as the COVID-19 pandemic has unfolded. At the same time, 4.3 million Americans missed their housing payment in May, up from 2 million in March, according to mortgage data company Black Knight. The overall delinquency rate stood at 8% at the end of May.

Source: FactSet, S&P Indices. The S&P/Case-Shiller Composiite 20 Index is a composite of the home price index for 20 major US metropolitan areas, using a modified version of the weighted repeat sales methodology.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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30-year rate falls

While stocks have rocked back and forth thus far this year, interest rates have generally trended lower—including the 30-year mortgage rate. One reason why the 30-year may be falling is an increase in prepayments by agencies who buy out loans, which can result in cash being used to issue new loans at lower rates. Some speculate that unless 10-year yields increase significantly, 30-year rates might continue to fall.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Stocks rock back and forth

Immediately after the worst quarter in over a decade for global stocks—as measured by the MSCI All-Country Index—the market had its best quarter in 11 years. While the Q2 rally recovered much of the coronavirus-induced losses, the risk of a downturn has accelerated in recent weeks with new confirmed cases at record levels in many places as testing ramps up and global economies reopen.

Source: Bloomberg, as of July 6, 2020.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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Summer stock doldrums

Q3 is typically the lowest-performing quarter for stocks, based on average quarterly price returns for the S&P 500 and Russell 2000. For example, the S&P 500 has averaged just 0.5% from July through September. That compares with greater than 2% gains for all other quarters. Of course, historical trends may be immaterial in this market, given the unique pressures of the global pandemic.

Source: CFRA, S&P Global, as of June 29, 2020. Past performance is no guarantee of future results.

Charts, screenshots, company stock symbols and examples contained in this module are for illustrative purposes only.

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