A Few Quick Thoughts

So here's a few bullet points on things I've been running through my brain in these waning weeks of summer.

On Covid:  

We see data on hospitalizations, recoveries and deaths.  What I'd like to see is better data that breaks the disease down by age group as well if there's any pertinent data on other factors such as comorbidities.  In particular, I'd like to see solid numbers on what the results are for people in the 18-30 age range that test positive for Covid.  What percent of this cohort gets sick?  How sick do they get?  What is the mortality rate for this cohort?  Of the mortality rate or percent of these people that get seriously ill, what, if any, are the extenuating circumstances?  Then let's see the same data at different age levels.  I mean this seems as important as just the base statistics that are normally issued in the press.  We know in Illinois that something over 50% of our Covid related fatalities occurred among the elderly, many in nursing homes.  We don't see much of this other data.  Think it's really important to try and understand this as we try to deal with the colder weather up north in the coming months.  Maybe this is out there but I've not seen it or at least not seen it in any detail.

Also on Covid maybe some of the optimism we've seen in the markets recently has to do with the marked decline in newly reported cases.  See here for why that may be the case.  Somebody asked me the other day how long I thought Covid would be with us and I said forever.  I think though we're learning to adapt to it and there's a higher probability in 3-5 years it will be similar to the flu.

Seasonality:

Normally at this point in the summer market trading would be thin and languid as the money set would be vacationing at whatever haunts they normally retreat to in the weeks prior to Labor Day.  However, there's nothing normal about this summer as the investment class has been likely working from these places for months.  This August has been anything but typical.  I still think there's a higher probability of market seasonality reasserting itself after Labor Day, especially as investors start to focus more on the elections.  

The markets are also expecting another stimulus package at some point and are likely going to pitch a fit if it's not forthcoming after Labor Day.

Another feature of late summer is the hurricane season and Laura looks like it could be the real thing that may hit around Houston on Thursday then doing a right hook through the middle of the country in the following days.  It seems to fit the pattern of bad things happening in 2020.  If this year was a car it would certainly be a lemon!

Market Returns:

Major US market indices may be posting new highs but this good news masks what's actually happening at the individual stock level.  I'm going to have more to say on this later on but understand that something like 6% of the S&P 500 is responsible for this year's gains.  The rest of the index is on average still trades lower than where it ended 2020.  Some sectors of the market are still down double digits.  For more on that see what I wrote about economic mass extinction events here.  Again, we'll take a look at this and what it might mean in a future post I just wanted to give you a quick peak at what I'll be discussing later on with you.

Back soon.

*Long ETF’s related to the S&P 500 in both client and personal accounts.