Broker Check

Strategas Daily Macro Brief









Prepared by Strategas Securities, a Baird Company

September 22 2020

Equities Remain a Yield Oriented Play

Ordinarily, 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 2020

Earnings Revisions Bounced Back Strong

Perhaps 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 2020

Dividend Increases Showing Signs of Life

Though early, increasing dividend payments is a signal that business conditions may be slowly finding stable ground.

September 17 2020

Beginning to See an Uptick in Positive COVID-19 Cases

Accompanied 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 2020

August Credit Card Spend Decelerates for the First Time Since April

Likely that this trend could persist until a catalyst to stimulate consumption arrives.

September 15 2020

Technology Next 12 Months Earnings Per Share Above Pre-Covid Levels

Despite the recent pullback in the technology stocks, this is not 1999/2000.

September 14 2020

Survey: Investors Now Believe the Next 10% Move is Higher

For 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 2020

Consumer Comfort Reaches New Recovery High

Far from its pre-crisis peak though. The consumer will play a vital role for the U.S. economy to repair. 

September 10 2020

After Jumping, Small Business Delinquencies are Moving Lower

Delinquencies for small businesses continue to show signs of improvement which bodes well for Banks in the upcoming quarter.

September 9 2020

Corporations 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 2020

Permanent Job Losers Remains a Concern

Likely hindering the full recovery of the labor market despite lock downs concluding throughout the U.S.

September 4 2020

Unprecedented 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 2020

Commodity Bottom Synonymous With Dollar Top

The negative correlation has been elevated since March lows. The dollar looks slightly oversold and any rallies could correspond with commodity weakness.

September 2 2020

Dividend Cuts/Suspensions Slowing

The trend has slowed significantly, likely a function of business starting to stabilize.

September 1 2020

S&P 500 Upward Earnings Revisions Improving

As a % of total revisions. Supports the recent equity rally, but could make things challenging in coming months. 

August 31 2020

Cash on the Sidelines Still Elevated Despite Market Rally

The personal savings rate and cash in money market funds have risen to extreme levels. Potential tailwind impact to equities in the future. 

August 28 200

Stocks Outperforming Bonds

Bond 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 2020

Spread Between Top 5 and Bottom 495 Widest Ever

The 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 2020

Future Expectations of Consumers Continue to Slide

Consumer confidence remains above where it was during the Great Financial Crisis, but yesterday marked the lowest reading since the “Great Lock-down.”

August 25 2020

S&P 500 Companies Have More Room to Cut Costs

Companies turn to cost cutting to maintain earnings. Currently, significantly less than the previous two recessions.

August 24 2020

Entering a Weak Stretch for Oil

Oil 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 2020

Bottom 495 Showing Signs of Life

A 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 2020

COVID-19 Accelerating E-Commerce Trend

The 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 2020

Consumer Discretionary Still Most Disconnected from Fundamentals

With 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 2020

REITs in a Very Challenging Environment

Significantly lagging as the pandemic accelerates the flight from urban living and working areas. 

August 17 2020

Comparing Recent P/E Expansion to the Great Financial Crisis

Charts suggest multipliers could expand even further.

August 14 2020

10-Year Yields Reach Highest Levels Since June

A 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 2020

Large-Caps Edge Out Small-Caps When Dollar Weakens

Though a weaker dollar tends to slightly favor large-caps, small-cap Earnings Per Share estimates are rising at a faster pace recently. 

August 12 2020

Valuation a Better Indicator of Long-Term Returns

Long term gains may be harder to come by and point to ~5% annualized returns over the next 10 years. 

August 11 2020

Percent of Companies Beating Estimates Tops 80%

Represents the highest reading on record based on data available back to the first quarter 1994.

August 10 2020

Mixed Government Expected to Remain Next January

Trump 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 2020

Fab Five Greater Income & Sales Growth

The 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 2020

Highest Level for Oil Since Failed OPEC+ Deal March 6th

Crude traded to its highest level as prices have been aided by economies reopening, stockpile draws, and OPEC+ production cuts. 

August 5 2020

Returns This Year Top Heavy

The 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 2020

Retail Dominates Share of Total Discretionary Bankruptcies

Is the brick-and-mortar to online shift permanently impaired these businesses, even post-crisis?

August 3 2020

S&P Upward Earnings Revisions Accelerating

Analysts revising earnings estimates higher in a “V-shaped” fashion, a development last seen after the Great Recession. 

July 31 2020

Worst Post-War GDP Print on Record

U.S. real GDP declined by -32.9% q/q annual rate in the second quarter.

July 30 2020

Emerging Markets Historically a Strong Performer When the Dollar Weakens

Returns averaged 16.6% compared to 11.5% for U.S. equities and 11.6% for Developed International shares.

July 29 2020

Drop in Consumer Expectations Bullish for Stocks

S&P 500 tends to perform better than average over the proceeding 12 months with similar magnitude changes in expectations.

July 28 2020

Technology Infrastructure a Long-Term Winner

What is less well known, is how well the data center and tower REITs fared despite the overall REIT sectors under performance.

July 27 2020

Forward Price to Earnings Nearing Tech Bubble Levels

The 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 2020

Stocks Fall Back Into Favor With Americans

As 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 2020

State and Local Government Fallout Still Widely Unknown

While 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 2020

Second Quarter Weakest for Mergers & Acquisitions Activity on Record

At only $22 billion. For comparison purposes, volumes were $73 billion during the Financial Crisis and $60 billion during the Tech Bubble. 

July 21 2020

Major Asset Class Performance Year to Date

The rally back in riskier assets has come as a surprise with the only asset class in our shortlist down significantly is oil.

July 20 2020

Real Yields Near Record Lows

10-year real yields continue to slide and are now approaching record lows.

July 17 2020

Strong Recovery in Traffic of Prospective Home Buyers

The 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 2020

A Weaker Dollar May Be Here to Stay

Companies with high foreign sales should benefit while inflation becomes a concern.

July 15 2020

Small Business Owners' Sales Expectations Recover Quickly

National Federation of Independent Business (NFIB) reports net % expecting higher sales improved 37 points to a net 13% of owners. 

July 14 2020

Earnings Season Kicks Off Today with Banks

Banks will likely provide the best clues, at least initially, on the state of the consumer.

July 13 2020

Majority of Investors Looking for Next 10% Move to be Lower

While 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 2020

Consumer Comfort for Incomes Over $100,000 Stalling

A 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 2020

Five Largest S&P Companies Continue to Gain Share

Account for 22.5% of the overall index from a market cap-perspective.

July 8 2020

Record Pace in Credit Downgrades

Standard & Poor’s made just short of 1,000 credit downgrades in the U.S. in 2Q’20 alone.

July 7 2020

Recovery Continues

Declining U.S. Dollar Index (DXY) historically good for equities. 

July 6 2020

Permanent Job Losers Rising

Forward 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 2020

Consumer Expectations Remain Elevated

Two 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 2020

Could 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 reopening

June 29 2020

Consensus Believes 2Q Will Be Trough Earnings

Skeptical 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 2020

Volatility Likely to Remain Elevated

News 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 2020

Fed's Annual Comprehensive Capital Analysis and Review Released

Sources and uses of cash under baseline and stressed economic & financial market conditions.

June 24 2020

A Tick Lower In Forward 12-Month Earnings

While one day does not make a trend, the moves lower in Technology and Health Care were unexpected. 

June 23 2020

Reminder: Market Timing is Difficult

Particularly in the current environment and the benefits of dollar-cost-averaging during downturns. 

June 22 2020

Highlighting Four Recent Topical Notes

June 19 2020

Cash Levels Just Beginning to Turn Lower

As 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 2020

Economic Surprise Index Surges

Better 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 2020

Rebound in Retail Sales Suggests Consumer Strength

Yesterday’s retail sales print came in stronger than expected at 17.7% M/M relative to a consensus estimate of 8.3%.

June 16 2020

Corporate Bond ETFs See Tremendous Inflows

Following yesterday’s announcement that the Fed would begin buying individual corporate bonds. In the second quarter, inflows of almost $42B.

June 15 2020

Google Trends Shows "Day Trading" Peaked June 9th

Important to remember, the move off of the March 23rd bottom has been strong and broad-based.

June 11 2020

Slower Economic Growth for Longer

A 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 2020

Ample Liquidity for Now

Likely 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 2020

Earnings Estimates Attempting a Bottom

While there is certainly risk that estimates turn lower again, for now, the earnings tide appears to be coming in again.

June 8 2020

Nonfarm Payroll Surprised on Friday

Surged +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 2020

Nonfarm Payroll Report Later This Morning

UPDATE: 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 2020

Rising Federal Healthcare Spending Bodes Well for Healthcare Equities

Health 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 2020

Small-Cap Debt to EBITDA at Multi-Year Highs

The 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 2020

ISM: Cautiously Optimistic

After 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 2020

Tale of Two Dollars

Strong in Asia while losing steam against the Euro. 

May 29 2020

30-Year Mortgage Rates Hit New Low

Could act as a catalyst to encourage consumers to remain engaged in the housing market despite the negative economic backdrop.

May 28 2020

Credit Spreads Narrowing

Unprecedented actions taken by the Fed to sure-up credit markets have narrowed spreads.

May 27 2020

Consumers' Future Expectations Still Elevated

Risk 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 2020

Mobility Trends Headed In The Right Direction

Driving trends have returned to the baseline levels from January of this year and walking trends are almost there.

May 21 2020

Domestic Equities Have Higher Exposure to Growth

May 20 2020

Beginning 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 2020

Front Month Crude Normalizing As Economy Reopens 

May 18 2020

Rising Food Prices Skewing Consumers' View of Prices

May 15 2020

Consumers Sentiment and Stocks Diverge

May 14 2020

Market Seasonal Choppy

May 13 2020

Small Businesses Concerned About Sales

May 12 2020

Declining Global Remittances an Issue for Emerging Markets

May 11 2020

Economic Recovery Centers on Consumers Now

May 8 2020

Non Farm Payroll Report Expected To Be Bad

May 7 2020

Grim Outlook from the Forward Curve 

May 6 2020

Bad Data Steak Continues with Non-Manufacturing Index Reading

May 5 2020

Weak Economic Data Continues with Factory Orders

May 4 2020

Supply Issues Remain

May 1 2020

April Was The Best Month For Stocks Since Jan 1987

Apr 30 2020

Largest Contraction in GDP Since 4Q'08

Apr 29 2020

Is Gold an Inflation Hedge?

Apr 28 2020

Investing With a Longer Time Horizon

Apr 27 2020

Economic Data to Watch in the Week Ahead

Apr 24 2020

Consensus Earnings Estimates Plummeting

Apr 23 2020

Small-Caps Don't Always Provide Leadership Off Lows

Apr 22 2020

Yield Curve Not a Vote of Confidence, Watching Closely

Apr 21 2020

Jet Fuel Demand Nonexistent 


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