Alchanati Campbell & Associates
The stock market is refusing to drop lower!! Even with record amounts of cash in money markets and on the sidelines, the stock market is either stagnant or moving higher. (Graphics 1-3). The US stock market is discounting a new expansion in its price while we only just began a major recession. The problem we are facing now is another rise in COVID-19 cases, which means tighter regulations, fear spiking, and lockdowns and hibernation beginning again. The US economy can not face another shutdown. Even though large corporations, like Apple, are shutting down some of their stores…again, small companies can not face any more economic shock. I am very certain that the rise in virus cases are due to three factors: 1) more testing, 2) the protests caused and are furthering the spread, 3) the weather is becoming hotter and while the hot weather was supposed to kill off the virus, people are staying inside with the A/C blasting and are becoming infected. The Federal Reserve pumping billions of dollars into the market is causing the market to stay-in-place; stagnant. (Graphic 4) Soon we may see what happens when the Fed stops the capital injections or slows them down. The Fed buying does not prevent defaults and it just shows how low long-term returns will be.
WHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now.