Joel’s Weekly Talking Points – 8/24/20

Earnings releases of note this week: Wal-Mart, Home Depot, Target, Lowes, NVIDIA, Palo Alto Networks. (not a recommendation to buy/sell/hold any of these securities)

  1. Market recap: Last week, US Large Growth returned to its relative outperforming ways over US Large Value beating it 3.05% to -1.44% respectively. Most other stock indexes were down last week and the broad US bond market as measured by the Barclays Aggregate bond index eeked out a 0.27% return.
  2. Data: Existing home sales increased 24.7% in July, and housing starts jumped 22.6%. Industrial production also improved, rising 3%, and retail sales rose 1.2% (2.2% with revisions). Overall, it was a fairly positive week of economic data.
  3. It must be election season: The Democratic party held their (virtual) convention last week and the Republicans will hold theirs this week. I seem to be making this statement a lot lately, and I believe it is worth immortalizing here: We will not make investment decisions based on red/blue, but we will make them base on policy and the likelihood that a given policy can be passed. In my opinion if Joe Biden wins if November, but the Republicans maintain control of the Senate, little if any of his proposals will pass. Obviously this is just one of many scenarios, but we will be analyzing all of the proposals and keeping an eye on the polls to best position portfolios for whatever outcome eventually materializes.
  4. Pandemic: Last week showed continued slowing of the “surge” in new cases here in the US. With any luck the spike we witnessed in June and July was “it” – as schools reopen we’ll see how this all plays out. Unfortunately we are already seeing hotspots in some areas where colleges have in-person classes. While this may not have a significant economic impact, it may certainly have a psychological impact which when fighting an invisible enemy could be worse.
  5. Pullback Imminent? Bob Doll from Nuveen, who many of you know I used to work with and respect greatly, wrote in his weekly column today that they see the potential for a pullback in the coming weeks. I am always leery of saying things like this because its very easy to be wrong far more than you are right. In my opinion there are pockets of pretty rich valuations, and others not so much. While a pullback can happen at any time, it’s a fool’s errand to try and time that move. Bob and I do agree on one thing though – if there is a pullback soon it will look like a buying opportunity for some stocks that have not yet fully rebounded over the past few months.
  6. Fun Fact of the Week: NOWHERE TO GO – There are 57 cruise ships either sitting at or anchored near US coastal cities waiting for the Center for Disease Control to lift the suspension of their industry. Many of the ships remain anchored at sea in order to avoid “port fees” that can exceed $10,000 a day (source: US Coast Guard).

Bottom line: The very first Presidential election I was old enough to vote in was 1992 (I voted for Ross Perot). I was fascinated with politics since the 1984 election (I was 11 years old) and have been hooked since. In the coming months I am sure we’ll hear all sorts of predictions about the elections and what will happen if “x”, “y” or “z” happens. There is plenty of historical data available that suggests it really doesn’t matter who wins in November, but that you stay invested for the long-term and that is essentially where I am. That doesn’t mean the same portfolio that works today will work in six months – there may be opportunities depending on new or adjusted policy – but we are still fighting the pandemic first and foremost.

Any opinions are those of Joel Faircloth and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.
Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.
International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility.
Individual investor’s results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
The Russell 1000 Index is an unmanaged index of 1000 widely held stocks that is generally considered representative of the U.S. stock market.
The Russell 1000 Value Index measures the performance of those Russell 1000 companies with higher price‐to‐book ratios and lower forecasted growth values.
The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price‐to‐book ratios and higher forecasted growth values.
The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.
The MSCI EAFE (Europe, Australasia, and Far East) is a free float‐adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 22 developed nations.
The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index’s three largest industries are materials, energy, and banks.
The Bloomberg Barclays US Aggregate Bond Index is a broad‐based flagship benchmark that measures the investment grade, US dollar-denominated fixed‐rate taxable bond market.
The Bloomberg Barclays U.S. Corporate High Yield Bond Index is composed of fixed‐rate, publicly issued, non‐investment grade debt, is unmanaged, with dividends reinvested, and is not available for purchase. The index includes both corporate and non‐corporate debt securities.
The FTSE EPRA/Nareit Global Real Estate Index is a free-float adjusted, market capitalization-weighted index designed to track the performance of listed real estate companies in both developed and emerging countries worldwide.
The Russell Midcap Index measures performance of the 800 smallest companies (31% of total capitalization) in the Russell 1000 Index.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.
Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing involves risk and investors may incur a profit or a loss.
See All

Take Advantage of Our Comprehensive Investment Guidance

Connect with an Advisor

External Link Notice

The following website is being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize, or sponsor the following website or their respective sponsors. Raymond James is not responsible for the content of the websites or the collection or use of information regarding the websites’ users and/or members.

Continue Cancel