Market Update 5.29.2020

May 29, 2020

In today’s video for Willow clients, Alexandra and Paul reflect on the market and economy over the last month and share highlights, analysis and outlook of market risk indicators and economic conditions.

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Market Update Summary (5/29/2020):

  • New data shows 47% of small businesses surveyed will not be able to restart their businesses post-pandemic.
  • We are concerned that record high unemployment numbers (almost 60 M unemployed) will remain higher than anticipated if these 47% of businesses are not able to reopen and rehire.   
  • We do not believe the market is fully accounting for this supply/demand discrepancy in jobs, and we are playing attention to longer-term implications and market corrections.
  • We question how long such widespread unemployment support can continue to prop up the economy and we are watching closely to see what will happen when this relief runs out and workers attempt to re-enter the workforce.
  • A critical look at the market shows that only 5 players are responsible for the rally we have been seeing recently. Remove those 5 companies and the remainder of the S&P 500 is down 8% YTD.  
  • A stock market isn’t truly healthy beneath the surface when the market strength is concentrated within 5 companies. We want to see more wide-spread gains across more companies and sectors before we will feel confident that we are on solid ground. 
  • We just hit an important technical indicator, the 200 Day Moving Average. If we can consolidate here and begin to see more companies participating in the market upside, we will feel more confident about market conditions.
  • There is good liquidity in the market and our risk indicators are tightening, but the risk levels are still too elevated for our comfort.
  • We’ve added a few strategic positions to our portfolios and continue to evaluate other positions for the right deployment of our cash reserves.
  • We are moving slowly and in no rush to re-enter as we watch closely all of the compounding factors that will signal the future direction of our market and economy.

We hope everyone is doing well and spending some time outside in this beautiful weather!  Please contact us with any questions or if you’d like to discuss your account.

Best regards,

The Willow Team
+1 413 236 2980