With 4 Trading Weeks Left In 2020, What Do Investors "Need To Know"?

Research Report Excerpts #1

Normal market operations like quarterly rebalancing brought markets back from the depths of despair back in March, but given present valuations such rebalancing operations may prove a headwind by year-end. As heralded by J.P. Morgan, rebalancing flows have flipped for pension funds since the Q2 period from bullish to bearish…

Research Report Excerpts #2

There are certain market trends investors have learned not to fight and monetary policy trends rank right at the top of the list of battles not to engage. Pulling out and looking at things from a 30,000 ft. view we see a trend that is your friend and one that should not be found an enemy. (Chart of global M2 supply)

So as we complete the month of November, we recognize that while it went well beyond the expected returns, based on the historic data, there is still a trend of seasonality that favors more equity market upside in December. (LPL Financial)

Research Report Excerpts #3

Breaking down the week by day is interesting. Based on this, hold off on buying any stocks. Monday after Black Friday has been a bad day for stocks; it has averaged a loss of 0.28% for the S&P 500 since 1990, with only 40% of the returns positive. In fact, seven of the last eight years, the Monday after Black Friday has been negative. The only day that has been especially bullish has been Friday of next week, which has averaged a gain of 0.62% with 80% of the returns positive.

Iotw 2 Nov 24

Research Report Excerpts #4

This was always to be expected, as manufacturing was not going to grow to the sky in the United States and has been on decline for roughly 40 years. The chart below identifies the regime shift from a manufacturing-based economy to a service-based economy, which began in the 1970s.

The Citi Economic Surprise Index is littered with lagging economic data, making it an inconsistent investment tool. Simply by looking at the previous chart positioned above, the index had been in negative territory since September of 2018, yet, the market has achieved new highs since that date. As such, we can clearly validate that it is less an investment tool than it is a greater tool for representing the lagging economic data surprises. And why do we say lagging? “X” marks the data that is old-news or backward-looking.

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