The S&P 500 Inches Closer to Record High Levels

The S&P 500 (SPX) crept up ever closer toward new record high territory, closing within six points the current record of 3,386.15 on Wednesday before dipping to close the week at 3,372.85.

From our perspective, the most remarkable thing about that figure is that its right in the middle of the red zone forecast range on the alternative futures chart.

That trajectory is consistent with the assumptions that investors are largely focusing on 2020-Q4 in setting current day stock prices and that they anticipate the Federal Reserve will maintain an expansionary monetary policy for the indefinate future. We periodically add redzone forecasts to the standard projections of the dividend futures-based model behind the alternative futures chart to compensate when they are affected by the echoes of past volatility, which arises because of the model's use of historic stock prices in its projections.

That said, the S&P 500 is largely tracking along with the latest redzone forecast we've added because the flow of new information hasn't prompted investors to alter their expectations or to shift their forward-looking focus. Confirmation of that assessment can be found in the week's major market-moving headlines, such as we tagged them during the week that was:

Monday, 10 August 2020

• Daily signs and portents for the U.S. economy:
  • Oil climbs on positive China data, rising demand
    • Oil giants' production cuts come to 1 million bpd as they post massive writedowns
    • Oil companies start to take back crude from U.S. emergency reserve
  • U.S. farmers leave fields fallow as COVID-19 wrecks crop prospects
  • Trump signs coronavirus relief orders after talks with Congress break down
    • Pelosi, Mnuchin open door to narrower COVID-19 aid through 2020
    • Trump says considering cutting capital gains tax, income taxes for middle-income families
• Post-coronavirus rebounds starting to gain traction:
  • China's factory deflation slows in July as recovery gains strength
  • Mexico stops bleeding jobs, president says, 15,000 added so far in August
  • Italy's Economy Minister sees third-quarter GDP rebound not far off 15%: paper
• Fed minion wants another fiscal relief package:
  • Fed's Evans says another coronavirus aid package 'incredibly important': interview
  • Fed's Evans says vulnerable workers affected by crisis face highly uncertain future
• S&P 500 ends up slightly, tech-related shares underperform value

Tuesday, 11 August 2020

• Daily signs and portents for the U.S. economy:
  • Oil eases as U.S. stimulus hopes dim, virus cases rise
  • U.S. will 'bond out' to cover Social Security, Medicare gaps under Trump's tax order: Kudlow
• Post-pandemic economic recoveries taking shape:
  • OECD sees South Korea growth to outperform all others this year
  • China auto sales surge in July, log fourth straight month of gains
  • Singapore warns of slow recovery as virus slams Asia's exporters
• Fed minions takes steps to help bail out debt-loaded state governments, worry about pandemic's impact on society:
  • https://www.reuters.com/article/us-usa-fed-municipal/fed-revises-pricing-on-municipal-liquidity-facility-idUSKCN2572PT
  • Fed's Daly says she worries pandemic will widen racial and gender inequalities
• S&P 500, Dow snap seven-day winning streak as concern mounts over stimulus deal

Wednesday, 12 August 2020

• Crude rises 2% after draw in U.S. oil stocks spurs demand hope
• Bigger stimulus under negotiation in the U.S.
  • U.S. Treasury chief says Democrats not interested in negotiating on coronavirus aid
  • Democrats, White House 'miles apart' over COVID-19 aid - Pelosi
  • Trump calls Democratic demands 'ridiculous' as blame traded over virus aid stalemate
• Fed policymakers say economic growth will be muted until virus contained
  • Fed's Daly says loss of enhanced unemployment benefits creates a 'hole' in spending
  • Fed's Daly says there is little evidence additional jobless benefits are discouraging work
• Bigger trouble not over in Eurozone, UK, and China:
  • Euro zone industry output rebound disappoints for second straight month
  • UK economy faces long climb back to health after historic 20% crash
  • Smartphone shipments in China plunge 35% in July: government data
• S&P 500 finishes within points of record high close

Thursday, 13 August 2020

• Daily signs and portents for the U.S. economy:
  • Oil slips after IEA lowers 2020 demand forecast
  • Trump administration 'satisfied' with China purchase progress in Phase 1 trade deal: Kudlow
  • U.S. Fed buys $39.9 billion of mortgage bonds, sells $17.85 billion
  • U.S. weekly jobless claims fall below one million; labor market pain far from over
• Bigger trouble developing in China:
  • China's banking sector expected to dispose $490 billion of bad loans in 2020: Xinhua
  • China's debt collectors flourish as consumers flounder in a COVID-hit economy
• Bigger stimulus under negotiation in the U.S., China secretly starts its own QE, and Bank of Japan starts bailing out Japanese banks:
  • Trump: U.S. Post Office, election funds stalling coronavirus relief talks
  • China data mystery prompts talk of stealth PBOC bond buying
  • BOJ paying banks to boost pandemic relief, compensates for negative interest rates
• S&P 500 ends down slightly after flirting with record levels again

Friday, 14 August 2020

• Daily signs and portents for the U.S. economy:
  • Oil prices down on demand worries, growing supply
  • U.S. second-quarter productivity rises at its fastest pace in 11 years
  • Kaplan: Consumers 'still spending', but shifts mean risks to service sector
  • Trump says ready to move on coronavirus aid, blames Democrats for holdup
• More trouble developing in China, but some signs of stimulus gaining traction:
  • China's retail sales unexpectedly fall as consumer caution prevails
  • China produces record crude steel in July on strong demand
• China facing trade hurdles on multiple fronts:
  • Sino-U.S. tensions to hurt China, U.S. and the world: stats bureau
  • A faltering U.S.-China trade deal is now the nations' strongest link
  • Exclusive: U.S.-China trade deal review postponed as China ramps up farm, energy purchases
  • Chinese firms hit by new import hurdles in India, sources say
  • China's leaders facing global resistance
• Eurozone posting unexpectedly strong post-pandemic rebound:
  • Euro zone trade surplus surges as imports drop, GDP and employment post record falls
  • German economy will grow strongly in third-quarter but full recovery will take time: ministry
• Coronavirus pandemic hitting hard in Latin America:
  • Latin America's coronavirus cases exceed 6 million
  • Peru's economy contracts 18.06% in June on coronavirus impact
  • Colombia's economy contracted 15.7% in second quarter, gov't says
  • Mexico central bank member eyes U-shaped economic recovery
• S&P 500 ends almost flat as record remains elusive

Meanwhile, Barry Ritholtz' latest list of positives and negatives that he found in the week's economics and markets news is posted over at The Big Picture.

We'll see if this next week finally sees the S&P 500 close at a new record high!