August 2020 – Mid Monthly Update
The S&P 500 has rapidly become the S&P 5 as the most popularly quoted US equity index has increasingly been driven by the top 5 stocks.
The first month of the second half of 2020 saw equity markets get off to a positive start. In contrast to the previous quarter’s surge in broad equity indices after March’s market dislocations, July witnessed a number of bumps in the road. As happened in June, the appearance of the occasional air pocket took the steam out of risk assets and reminded investors that although volatility has receded, it hasn’t gone away. The year to date picture of the VIX volatility index below, sourced from Yahoo Finance, illustrates the changes in volatility.
A fairer society is the great hope of many as the world emerges from this pandemic. That does seem to be the way responses to the Covid-19 virus have steered fiscal policy. Frustration frequently results in protests – the gilets jaunes for example, although French protesting is a cultural thing going back to the revolution. In the US, the death of George Floyd and the resultant Black Lives Matter protests have lit the touch paper which has the potential to change society in profoundly positive ways both in the US and worldwide.
Indigestion June had seen a continuation of rising prices for risk assets as expectations of a decent economic recovery were underpinned by further lockdown easing in Europe and the US. Just when you thought it was safe to go back in the water, last Thursday’s 6% fall the US S&P500 index reminded investors that the […]
May saw a continuation of the rally in risk assets that started at the end of March and continued through April. Growth equities were the winners in May especially in technology sectors benefiting from restricted economies and the resultant expansion of the digital economy.
Know Your Alphabet? Not a question about Google’s holding company but a prompt about certain letters – U, V, W not an updated German car company either. Those letters represent the preoccupation of the financial media with a letter that signifies the shape of the likely economic recovery from the current slump. For those fixated […]
Last week saw the dislocation of the oil market. Having suffered a demand shock when economies around the world hit a sudden stop, the Russians and Saudi Arabia decided to magnify the problem by trying to gain market share, in the process pumping vast quantities of oil which few needed.
Next Sunday, April 26th, would have seen the London Marathon take place. Of course, it was postponed some weeks ago but as a previous participant (three times having said ‘never again’ after the first time, slower and slower by the way) it always brings back some fond memories and the odd wince.
The first half of April could not contrast more with that of March as far as financial markets are concerned. The first three weeks of March saw market turmoil and at the start of March’s third week, a dislocated set of markets that barely functioned until central banks stepped in.