So What’s up With the Stock Market?

The stock market seems to be on a roll. And nobody knows why. We watch the news, and all you hear about are the horrors. People getting sick, Governors are shutting down states, kids are not going back to school in the fall, and supposedly our economy is stalling. So what are the drivers of this market that seems to be such a mystery to everyone in the newsroom?

Here are some of the economic and business realities I have been reading:

US industrial production forecast was 4.3%. However, the actual results were much higher at 5.4%. That’s about a 25% improvement.

Month over month factory production forecast was only 5.7%. However, results were much higher at 7.2%. Another 25% improvement.

The NY Fed’s regional manufacturing index showed an impressive improvement in factory activity. It’s worth noting that New York and New Jersey were late to reopen, and some of the rebound is due to pent-up demand.

The Empire State manufacturing index forecast was 10% but actually reported an astounding 17.2%, a 70% improvement.

The Wall Street Journal reports that as soon as states open back up, their economic activity index snaps back rapidly from pentup demand.

Of course, not every report is good. There remains a downside, including many concerns we all face. High levels of unemployment, small businesses suffering from states closing. Lack of demand in the airlines and other leisure and business activities causing layoffs. Month after month changes in Morning Consult’s consumer confidence index shows deterioration in sentiment in July, meaning that people are discouraged and not happy with the state of affairs.

Yes, unfortunately these are strange and uncomfortable times. Mixed signals economically can cause uncertainty. But there are bright points of light. And these bright areas of our economy need to be broadcast as good news rather than reported as everything being totally bleak.

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Warmest Regards,

Your friends at Woloshin Investment Management