“Keep the Faith, Trust this Recovery”– Paul Ebeling
This V-shaped economic recovery, coming Covid vaccines and continued Trump Fed policy support offer continuing favorable environment for stocks and credit into next year and further.
In our outlook for Y 2021 investors overweight stocks and corporate bonds against cash and government debt, and sell the Buck. And watch commodities for recoveries.
Volatility will decline.
A gauge of global stocks headed toward a record Monday on optimism that the expected roll-out of vaccines and additional US fiscal stimulus will bolster the world economy.
Some see the short-term outlook as challenging because some nations are resorting to lockdowns to fight a resurgence in virus cases and Congress Squabbles over the size of US relief spending.
Morgan Stanley joins JPMorgan Chase & Co.,Goldman Sachs Group Inc. and US in painting a risk on outlook for equities.
Final US election results will create a Bull case for markets, and society come back normal mid Y 2021.
Risks include a worse-than-expected COVID Winter wave, and a return to austerity in short term.
How we see things playing in this post-instant recession play book, as follows:
- A case for the S&P 500 to reach 3,950-4,000 in Y 2021
- A 10-yr US Treasury yield at 1.45% end of Y 2021
- The .DXY to weaken about 5-10%+ end of Y 2021
- An investor preference for high-yield credit over investment grade and leveraged loans over high-yield bonds
- A cut in the forecast for gold to 1,825 -1,750oz on average for Y 2021 from a prior 1,950 – 2,000 oz on the economic recovery
Monday, the benchmark US stock market indexes finished at: DJIA +470.63 at 29950.38, NAS Comp +94.84 at 11924.05, S&P 500 +41.76 at 3627.05
Volume: Trade on the NYSE came in at 1.1-B/shares exchanged.
HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias.
- NAS Comp +32.9% YTD
- S&P 500 +12.3% YTD
- Russell 2000 +7.0% YTD
- DJIA +5.0% YTD
Looking Ahead: Investors will receive Retail Sales for October, Industrial Production and Capacity Utilization for October, the NAHB Housing Market Index for November, Import and Export Prices for October, Import and Export Prices for October, Business Inventories for September, and Net Long-term TIC Flows for September Tuesday
Have a healthy day, Keep the Faith!