Today we turned conventional wisdom upside/down with our “A Stay-at-Home” rally post.

Nearly everyone we speak to believes the market is up because of expectations the economy is going to ramp in the second half of the year.  We would argue the opposite.  The S&P 500 (SPX) is up from the April 9th Fed decision, but those areas of the market that typically respond to a stronger economic ramp off a major low continue to underperform.  That decision was designed to show the Fed will go out of its way to make sure there is better growth ahead, but as our post today points out, the KBW Banks Stock Index and S&P 500 Industrial sector are down from that decision.

Today’s move higher in the SPX is again being driven by the “Covid-19” trade, which refers to buying those stocks that are benefitting in the “work-from-home” (WFH) environment at the expense of “Back-to-work” environment.  The market continues to send a message of slow economic recovery vs. the popular narrative of sharper second half growth.


Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. 

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