Special Risk Capital Management LLC

Waiting for Stimulus October 11, 2020

Posted by Tom in Thoughts.
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Oct. 9, 2020 – No doubt about it, the US markets are waiting for the second round of economic stimulus. Trump’s “no deal” comment sent the markets lower and fast. Now, with hope for something, we’re back up. Since the US economy is driven by consumer spending (roughly 70% of it), it is little wonder than when +25 million are out of work and another ? million are on shaky ground that some help is in order . . . . and needed ASAP.

I’m away from my office this weekend so this report will be brief. The chart below shows the NASDAQ Composite Index getting back on it’s feet. While we’ve broken out of a trading range this market is susceptible to news . . especially bad news.

All of the indicators are now Bullish but this pre-election envirnoment looks pretty shaky. While I’m about 50% invested I’, still cautious. Everything could “turn on a dime”/ Not a robust environment to deploy money.

While Tech and Small Cap stocks are strong, so are Utilities. (defensive). Sector strength table below:

I’ve just got this feeling that things will not stabilize until after the elections in the US. Europe is dealing with a second wave of the virus and things aren’t much better in the US. Some people refuse to take the virus seriously and that bids for a slow economic recover. I note that China is coming up in the sector ranking . . . they are serious.

Have a good wee and be extra careful. This economy is waiting for stimulus but may get something else.

……………… Tom ………………