PAPER TIGER?

In last week’s Monday email to you, I opined there might be two awakened tigers, one being inflation and the second the highly infectious Delta coronavirus variant and, as if on cue, financial markets worldwide tumbled Monday and Tuesday. The reason was, of course, concerns that the escalating case numbers of those infected and renewed shutdowns would severely impact the improving global economies.

However, by Wednesday investors appeared to emulate Mad Magazine’s Alfred E. Neuman’s famous quote, “What, me worry?” Despite Covid infections still surging, with zero signs of abating, and new reports indicating as many as 20% may be in fully vaccinated individuals, financial markets recovered all their losses and then some!!

The Dow Jones closed above 35,000 for the first time, rising 1% for the week, despite dropping more than 700 points on Monday. The S&P 500 rose 2% and the Nasdaq added 2.8%. Gains, with few exceptions, were global in nature and across most sectors. Our TSX’s rise of 1% was middle of the pack, well behind the US and most European indices. The Canadian dollar, which had recently lost much of its 2021 gains, rose 0.4%, welcome news for desperate snowbirds when border restrictions are eventually lifted.

Why the rapid turnaround?

  • Was it the impressive corporate earnings reports? So far, 85% of American companies reporting 2nd quarter results beat analysts’ expectations.
  • Was it the surveys of European companies reporting the strongest increase in activity in 20 years?
  • Was it nervous investors regretting their Monday panic? Lipper Inc., which tracks these things, reported equity fund outflows of $8.8 billion for the week ending 21-Jul vs inflows of $628M in w/e 14-Jul. So maybe it was a late-week reversal of this trend, and remorseful buyers finding a dearth of remaining sellers and thus forcing prices higher?
  • Was it that, for the most part, SO FAR, the US infections are in states that economically play a relatively smaller part of US GDP?

It does NOT appear that Variant D is anywhere close to peak. This weekend Florida (by no means a minor economic state) reported a 15.1% positivity rate and more coronavirus cases (73,199) this past week than California, Texas, New York, and Illinois combined. It was the state’s biggest one-week surge since January 27, 2021.

So, going forward, I think we should expect more of the whiplash economic /Covid/shutdown news and corresponding volatile reactions by financial markets.

And to end on my other Tiger note of last week – inflation. If one considers that the decades-long move of US manufacturing to China had to be disinflationary to US labor and to US goods prices, how can any reversal of that move be anything but inflationary? It is not by chance that the ten biggest container ports in the world are in China.

July 5,2021- On The Move

June 28,2021- Audi Makes A Big Bet

June 21, 2021 - Head-Fake???

June 14, 2021- Big Bets!

June 7, 2021 - Mixed Messages

May 31, 2021-Positive End to Volatile Month

May 25, 2021-Time To Get Off The Teeter-Totter

May 17, 2021 - Transitory

May 10, 2021 - Lucky it Wasn't SuperBowl Week!

May 3, 2021 - Supply Chain-- This Year's Buzz Phrase?

April 26, 2021 - Tax The Rich

April 19, 2020 - New Highs

April 12, 2020 - Millions vs Trillions

March 29, 2021 - Saved At The Bell

March 22, 2021 - The 'Oh-No' Team Edges Ahead

March 15, 2021 - FOMO VS OH NO!

March 08, 2121 - WFH to .....

March 1, 2121 - Rising Rates Scare

February 22, 2021- A Healthy Rotation?

February 16, 2021 - The Debt of Reckoning

February 8, 2021 - For The Graduate - It's Batteries!

February 1, 2021 - Stop The World

January 25, 2021 - SPACS - Zoom or Swoon??

January 18, 2021 - Switcheroo?

January 11, 2021 - Breakthrough

December 21, 2020 - Didn't!!

December 14, 2020 - A Pause Before Christmas

December 7, 2020 - Main ST. & Wall ST. Diverge

November 30,2020-AAS Revisted

November 23, 2020- Ground Hog Day

November 16, 2020 - Vaccine Pop

November 9, 2020- The American Way

November 2, 2020- PPE

October 26, 2020- Crunch Time

October 19, 2020 - Counting

October 13, 2020 - Shake It Off!!!

October 5, 2020 - The Line Holds For Now - However!!

September 28, 2020 - It's All About 3 Key Words

September 21, 2020 - A Second Wave?

September 14, 2020 - Not A Lot To Cheer About

September 9, 2020 - Hump Day then Thump Day

August 31, 2020 - ASA Coming To The Fore

August 24, 2020 - The Debate Intensifies!

August 17,2020 -Potpourri

August 10, 2020- When Bad News is Good News

August 4,2020 - Three Records of Note

July 27, 2020 - Vaccine Vs Virus - Round 2

July 20, 2020 - Vaccine Vs Virus-Fight On!

July 13, 2020- A Week of Highs & Lows

July 6, 2020 - Economy VS Covid Cases

June 29, 2020 - A Bridge Too Far

June 22, 2020 - What Me Worry?

June 15, 2020-Reality Check??

June 8, 2020- It's All About The Workers

June 1, 2020 - Can We Bank on The Banks??

May 25, 2020- A Very Good Week For Stocks

May 19, 2020- Hedgehoppers Anonymous

May 11, 2020 - Was Monty Python Right?

May 4,2020 - Balancing the Teeter-Totter

April 27, 2020 - Oil - Another reason...

April 20, 2020- The Curate's Egg

April 13, 2020- Governor Cuomo Knows Best

April 6, 2020-  Stock Markets - It's a Teeter-Totter

March 30, 2020 - Stuck Like Glue

March 23, 2020-As Always, Bob Dylan Has The Answer

March 16, 2020 - Show Me The Money

March 9, 2020 - Interest Rates-The Race to Zero

March 2, 2020 - The Unknown Unknowns

February 24, 2020 - It's Always The Unexpected

February 18, 2020 - Oh (Dear!) Canada

February 10, 2020 - Sick Or Not I'm Going To Work

February 3, 2020 - A Turn For The Worse

January 27, 2020- Run For The Exits!!

January 20, 2020 - All Aboard!!!

January 13,2020 -  The Year That Was - A Wall of Worry

December 16, 2019 - Dear Santa

December 9,2019 - Those Who Live by The Tweet...

December 2,2019 - Taylor Swift

November 18, 2019 - Like The Duck in the Pond

November 11, 2019 - A "RISK ON" WEEK

November 4, 2019 - What About The Workers?

October 28, 2019 - Trick or Treat

October 21, 2019- The Gains Continue

October 15, 2019 - All We Are Saying.....

October 7, 2019 - Saved By The Workers!!

September 30, 2019 - Second Verse Same As The First!!

September 23, 2019 - About Face!

September 16, 2019-UP In Smoke

September 3, 2019 - The Sleeping Giant is Awake

August  26, 2019 -WOW!

August 19, 2019- "Do I Feel Lucky? Well,do ya, punk?"

August 12, 2019- Recession Rumblings

August 6, 2019-Coin Toss Part 2 - It came up HEADS!! = Bonds

July 29,  2019 - THe US Economy and Stocks (still) Lead The Way

Coin Toss- HEADS = Bonds  TAILS = Stocks

A Short USA Holiday

July 2,2019 - A Friday Rally Helped Cap An Impressive Month of Gains

June 24 - The Only Missiles Launched last Week were Financial Ones!! Whew!!!

June 17 - The Calm Before The Storm

June 10, 2019 - The Powell Put #2

May 29, 2019 - What To Do For An Encore

May 27,2019 - Let's Make A Deal

May 13, 2019 - When Elephants Fight