4/27/20 Market Notes
Last week proved to be very interesting, as oil prices plunged, taking stocks with them, before recovering in the second half of the week. All in all, stocks ended flat for the week, and are now down about 13% (S&P 500) this year. More significantly, given how much has happened, it is encouraging that the S&P is only down about 3% over the past year. Of course, there has been significant performance divergence amongst the various sectors comprising the S&P. And within these sectors the performance divergence by sub-category has been even more pronounced. Take, for instance, Real Estate – the sector as a whole is down almost 15% year to date. But within the sector, mall operators and hotels are down sharply (Marriott International is down 46% YTD), whereas data centers and communication towers (American Tower Corp is up 6% YTD) have been strong outperformers. While many investors and many talking heads in the media are painting the environment with a broad brush, effectively throwing out the baby with the bathwater, a more disciplined and calculated approach can yield better results. Of course, that’s with the benefit of hindsight, and it isn’t easy to forecast what sectors might outperform in the next 6 months. It will be a busy week for market participants, centered around Wednesday’s FOMC meeting minute release and Chairman Powell’s press conference. April data has just started to roll in, and so far the numbers aren’t pretty, albeit within the range of what many expected. This is also a week in which we will start hearing more concrete plans from various states on ‘reopening’ their economies. This is possibly the most important event for markets, as a careful, staggered and phased reopening of businesses is critical to many. The logistical challenges are tremendous, in particular for any business that relies on parts or supplies from a business that may still be shuttered. The supply chain that has helped our economy thrive is complex and interrelated, and therein lies the challenge.
Disclosures: This market commentary is written by the 1879 Advisors® and represents the views of 1879 Advisors®. This commentary is not investment advice and should not be used as a basis to make investment decisions. Please consult with your registered investment advisor before making any investment decisions.