Strategas Daily Macro Brief Prepared by Strategas Securities, a Baird Company September 22 2020Equities Remain a Yield Oriented PlayOrdinarily, one would assume an equity investment has more risk over 10-year treasures but that may not be the case this time with treasury rates so low.September 21 2020Earnings Revisions Bounced Back StrongPerhaps helped by a better than expected 2Q reporting season and fiscal aid. Gains in the future will get more difficult, but forward earnings estimates continue to rise.September 18 2020Dividend Increases Showing Signs of LifeThough early, increasing dividend payments is a signal that business conditions may be slowly finding stable ground.September 17 2020Beginning to See an Uptick in Positive COVID-19 CasesAccompanied by a downturn in high-frequency mobility data, likely weather related, but a prolonged move lower would be an ominous sign for economic activity.September 16 2020August Credit Card Spend Decelerates for the First Time Since AprilLikely that this trend could persist until a catalyst to stimulate consumption arrives.September 15 2020Technology Next 12 Months Earnings Per Share Above Pre-Covid LevelsDespite the recent pullback in the technology stocks, this is not 1999/2000.September 14 2020Survey: Investors Now Believe the Next 10% Move is HigherFor the first time since March's sell-off, more investors believe the next 10% move in the S&P 500 is higher rather than lower. September 11 2020Consumer Comfort Reaches New Recovery HighFar from its pre-crisis peak though. The consumer will play a vital role for the U.S. economy to repair. September 10 2020After Jumping, Small Business Delinquencies are Moving LowerDelinquencies for small businesses continue to show signs of improvement which bodes well for Banks in the upcoming quarter.September 9 2020Corporations Issuing Longer-Dated Maturities Hard to argue this doesn’t make sense with rates at historic lows and the near-term business environment challenged. Financials and consumer-oriented firms leading the pack.September 8 2020Permanent Job Losers Remains a ConcernLikely hindering the full recovery of the labor market despite lock downs concluding throughout the U.S.September 4 2020Unprecedented Out-performance, Time For a Breather?Multiple blips during the past decade for growth’s out-performance of value, but head fakes every time.September 3 2020Commodity Bottom Synonymous With Dollar TopThe negative correlation has been elevated since March lows. The dollar looks slightly oversold and any rallies could correspond with commodity weakness.September 2 2020Dividend Cuts/Suspensions SlowingThe trend has slowed significantly, likely a function of business starting to stabilize.September 1 2020S&P 500 Upward Earnings Revisions ImprovingAs a % of total revisions. Supports the recent equity rally, but could make things challenging in coming months. August 31 2020Cash on the Sidelines Still Elevated Despite Market RallyThe personal savings rate and cash in money market funds have risen to extreme levels. Potential tailwind impact to equities in the future. August 28 200Stocks Outperforming BondsBond proxies (e.g. defensive sectors) are making new relative lows vs. the broad market despite a drop in bond yields that historically would be an ideal macro backdrop for the space.August 27 2020Spread Between Top 5 and Bottom 495 Widest EverThe six-month rate of change differential is 42%, which is even greater than what it was during the dot.com bubble. With the top 5 making up almost 24% of the index now, caution remains warranted.August 26 2020Future Expectations of Consumers Continue to SlideConsumer confidence remains above where it was during the Great Financial Crisis, but yesterday marked the lowest reading since the “Great Lock-down.”August 25 2020S&P 500 Companies Have More Room to Cut CostsCompanies turn to cost cutting to maintain earnings. Currently, significantly less than the previous two recessions.August 24 2020Entering a Weak Stretch for OilOil has enjoyed an impressive run thanks to a weak US Dollar and reopening efforts, but could be approaching a difficult stretch, as October and November have historically been the weakest months.August 21 2020Bottom 495 Showing Signs of LifeA broadening out of the rally would be welcomed news to market participants. Since the end of June, the bottom 495 companies are up almost 10%.August 20 2020COVID-19 Accelerating E-Commerce TrendThe 4.3% increase in e-commerce market share for 2Q was roughly equivalent to the gain made in the five years prior. The key now is how much will stick post-pandemic.August 19 2020Consumer Discretionary Still Most Disconnected from FundamentalsWith substantial exposure to Amazon, concentration risk (mostly to the upside lately) is a concern. However, the equal-weighted index has turned a corner. August 18 2020REITs in a Very Challenging EnvironmentSignificantly lagging as the pandemic accelerates the flight from urban living and working areas. August 17 2020Comparing Recent P/E Expansion to the Great Financial CrisisCharts suggest multipliers could expand even further.August 14 202010-Year Yields Reach Highest Levels Since JuneA recent increase above 70 basis points, generally a positive sign for the economy at large. But, if the rise in nominal yields lead to an increase in real yields, it may signal trouble for gold.August 13 2020Large-Caps Edge Out Small-Caps When Dollar WeakensThough a weaker dollar tends to slightly favor large-caps, small-cap Earnings Per Share estimates are rising at a faster pace recently. August 12 2020Valuation a Better Indicator of Long-Term ReturnsLong term gains may be harder to come by and point to ~5% annualized returns over the next 10 years. August 11 2020Percent of Companies Beating Estimates Tops 80%Represents the highest reading on record based on data available back to the first quarter 1994.August 10 2020Mixed Government Expected to Remain Next JanuaryTrump remains out of favor among Strategas' clients, with only 39% odds. However, 59% now believe Republicans will still control the Senate, up 3% from July. August 7 2020Fab Five Greater Income & Sales GrowthThe concentration is extreme and growing earnings and sales at much faster rates than the rest of the index and driving multiple expansion. A scenario that has self-corrected in the past.August 6 2020Highest Level for Oil Since Failed OPEC+ Deal March 6thCrude traded to its highest level as prices have been aided by economies reopening, stockpile draws, and OPEC+ production cuts. August 5 2020Returns This Year Top HeavyThe five largest stocks in the S&P 500 have, for the most part, driven returns this year. Apple generates more net income than the Russell 2000. August 4 2020Retail Dominates Share of Total Discretionary BankruptciesIs the brick-and-mortar to online shift permanently impaired these businesses, even post-crisis?August 3 2020S&P Upward Earnings Revisions AcceleratingAnalysts revising earnings estimates higher in a “V-shaped” fashion, a development last seen after the Great Recession. July 31 2020Worst Post-War GDP Print on RecordU.S. real GDP declined by -32.9% q/q annual rate in the second quarter.July 30 2020Emerging Markets Historically a Strong Performer When the Dollar WeakensReturns averaged 16.6% compared to 11.5% for U.S. equities and 11.6% for Developed International shares.July 29 2020Drop in Consumer Expectations Bullish for StocksS&P 500 tends to perform better than average over the proceeding 12 months with similar magnitude changes in expectations.July 28 2020Technology Infrastructure a Long-Term WinnerWhat is less well known, is how well the data center and tower REITs fared despite the overall REIT sectors under performance.July 27 2020Forward Price to Earnings Nearing Tech Bubble LevelsThe pace of multiple expansion over the last four months will be challenging to sustain, and we would expect it to slow in the second half.July 24 2020Stocks Fall Back Into Favor With AmericansAs their favorite long-term investment at nearly 28%, with real estate close behind. However, cash is next at 18% despite historically low money market and bank deposit rates.July 23 2020State and Local Government Fallout Still Widely UnknownWhile pent-up demand may help retails sales rebound, elevated structural unemployment is likely to persist at varying levels. Municipalities will certainly be looking for federal aid.July 22 2020Second Quarter Weakest for Mergers & Acquisitions Activity on RecordAt only $22 billion. For comparison purposes, volumes were $73 billion during the Financial Crisis and $60 billion during the Tech Bubble. July 21 2020Major Asset Class Performance Year to DateThe rally back in riskier assets has come as a surprise with the only asset class in our shortlist down significantly is oil.July 20 2020Real Yields Near Record Lows10-year real yields continue to slide and are now approaching record lows.July 17 2020Strong Recovery in Traffic of Prospective Home BuyersThe potential V-shaped recovery developing in traffic of prospective buyers off of the April lows should create a tailwind for housing in the 2H of the year when combined with record low mortgage rates.July 16 2020A Weaker Dollar May Be Here to StayCompanies with high foreign sales should benefit while inflation becomes a concern.July 15 2020Small Business Owners' Sales Expectations Recover QuicklyNational Federation of Independent Business (NFIB) reports net % expecting higher sales improved 37 points to a net 13% of owners. July 14 2020Earnings Season Kicks Off Today with BanksBanks will likely provide the best clues, at least initially, on the state of the consumer.July 13 2020Majority of Investors Looking for Next 10% Move to be LowerWhile 66% (of Strategas clients) believe the next 10% move for the S&P will be lower, 87% believe the S&P will make a new high by the end of 2021.July 10 2020Consumer Comfort for Incomes Over $100,000 StallingA reason for caution. While the trend could re accelerate, the pause will likely linger if the second wave of coronavirus cases continues to spiral. July 9 2020Five Largest S&P Companies Continue to Gain ShareAccount for 22.5% of the overall index from a market cap-perspective.July 8 2020Record Pace in Credit DowngradesStandard & Poor’s made just short of 1,000 credit downgrades in the U.S. in 2Q’20 alone.July 7 2020Recovery ContinuesDeclining U.S. Dollar Index (DXY) historically good for equities. July 6 2020Permanent Job Losers RisingForward 12-month S&P Earnings Per Share reflecting slow and steady improvement in analyst expectations for the coming year. Currently, analysts believe earnings should continue to improve over the next twelve months, but that could change should outlooks weaken.July 1 2020Consumer Expectations Remain ElevatedTwo beliefs: the majority of individuals furloughed believe it's temporary and fiscal policy replaced most or all of income lost. This continues to bear out the need for more stimulus this summer.June 30 2020Could Rising Cases Impact 3Q Data?Hospitalizations are well below April levels, key to preventing nationwide shutdowns. However, additional stimulus is critical as the virus spreads and prevents widespread reopeningJune 29 2020Consensus Believes 2Q Will Be Trough EarningsSkeptical of a recovery to pre-COVID levels by 3Q21. Skepticism exacerbated by above-average uncertainty, as only 49 firms have provided Q2 EPS guidance.June 26 2020Volatility Likely to Remain ElevatedNews and noise of COVID-19, lack of company forward guidance, recovery from trough levels of economic activity, and the incoming U.S. presidential election. June 25 2020Fed's Annual Comprehensive Capital Analysis and Review ReleasedSources and uses of cash under baseline and stressed economic & financial market conditions.June 24 2020A Tick Lower In Forward 12-Month EarningsWhile one day does not make a trend, the moves lower in Technology and Health Care were unexpected. June 23 2020Reminder: Market Timing is DifficultParticularly in the current environment and the benefits of dollar-cost-averaging during downturns. June 22 2020Highlighting Four Recent Topical NotesJune 19 2020Cash Levels Just Beginning to Turn LowerAs a percentage of S&P market cap, cash levels are smaller than during the Global Financial Crisis which may indicate the tailwind is shorter-lived.June 18 2020Economic Surprise Index SurgesBetter than expected economic results have appeared to create a “V” shape from a growth rate perspective, but actual levels are still below those seen pre-crisis.June 17 2020Rebound in Retail Sales Suggests Consumer StrengthYesterday’s retail sales print came in stronger than expected at 17.7% M/M relative to a consensus estimate of 8.3%.June 16 2020Corporate Bond ETFs See Tremendous InflowsFollowing yesterday’s announcement that the Fed would begin buying individual corporate bonds. In the second quarter, inflows of almost $42B.June 15 2020Google Trends Shows "Day Trading" Peaked June 9thImportant to remember, the move off of the March 23rd bottom has been strong and broad-based.June 11 2020Slower Economic Growth for LongerA dovish Fed coupled with growth shares (and inherently, Technology companies) in a stretch of out-performance not seen since the late 1990’s.June 10 2020Ample Liquidity for NowLikely protects from wide spread solvency issues for the time being. Perhaps a rising risk is that improving economic data causes the Fed to let up on the gas pedal.June 9 2020Earnings Estimates Attempting a BottomWhile there is certainly risk that estimates turn lower again, for now, the earnings tide appears to be coming in again.June 8 2020Nonfarm Payroll Surprised on FridaySurged +2.5 million in May as lower-paid workers were added back quickly. The unemployment rate declined to 13.3% from 14.7%.June 5 2020Nonfarm Payroll Report Later This MorningUPDATE: Big Beat. Surprise to the Upside: +2.5M, while unemployment registers 13.3%. Certainly, there is some noise in the data, but this is an overwhelmingly positive report.June 4 2020Rising Federal Healthcare Spending Bodes Well for Healthcare EquitiesHealth Care equities have done well and are likely taking a breather but ultimately are going to need to be part of the solution going forward.June 3 2020Small-Cap Debt to EBITDA at Multi-Year HighsThe U.S. trailing 12-month debt to EBITDA multiple for the overall Russell 2000 index is rising quickly as earnings are wiped out, and debt is rising.June 2 2020ISM: Cautiously OptimisticAfter April's contraction, which ended a period of 131 consecutive months of growth, May's PMI registered up 1.6 percentage points to 43.1 percent. June 1 2020Tale of Two DollarsStrong in Asia while losing steam against the Euro. May 29 202030-Year Mortgage Rates Hit New LowCould act as a catalyst to encourage consumers to remain engaged in the housing market despite the negative economic backdrop.May 28 2020Credit Spreads NarrowingUnprecedented actions taken by the Fed to sure-up credit markets have narrowed spreads.May 27 2020Consumers' Future Expectations Still ElevatedRisk appetite has been impressive as traditional measures of ‘risk-on’ price action remains consistent with what is typically seen coming off market lows.May 22 2020Mobility Trends Headed In The Right DirectionDriving trends have returned to the baseline levels from January of this year and walking trends are almost there.May 21 2020Domestic Equities Have Higher Exposure to GrowthMay 20 2020Beginning To See The Molodovsky Effect With Multiples Opportunistic times to buy equities longer-term with the high price to earnings ratios associated with the bottom of economic cycles due to depressed earnings.May 19 2020Front Month Crude Normalizing As Economy Reopens May 18 2020Rising Food Prices Skewing Consumers' View of PricesMay 15 2020Consumers Sentiment and Stocks DivergeMay 14 2020Market Seasonal ChoppyMay 13 2020Small Businesses Concerned About SalesMay 12 2020Declining Global Remittances an Issue for Emerging MarketsMay 11 2020Economic Recovery Centers on Consumers NowMay 8 2020Non Farm Payroll Report Expected To Be BadMay 7 2020Grim Outlook from the Forward Curve May 6 2020Bad Data Steak Continues with Non-Manufacturing Index ReadingMay 5 2020Weak Economic Data Continues with Factory OrdersMay 4 2020Supply Issues RemainMay 1 2020April Was The Best Month For Stocks Since Jan 1987Apr 30 2020Largest Contraction in GDP Since 4Q'08Apr 29 2020Is Gold an Inflation Hedge?Apr 28 2020Investing With a Longer Time HorizonApr 27 2020Economic Data to Watch in the Week AheadApr 24 2020Consensus Earnings Estimates PlummetingApr 23 2020Small-Caps Don't Always Provide Leadership Off LowsApr 22 2020Yield Curve Not a Vote of Confidence, Watching CloselyApr 21 2020Jet Fuel Demand Nonexistent Have a Question Name Email Address Phone Question Thank you! 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