September 9, 2021
Good morning,
First, thank you to so many of you for your “feel better” messages and, for sharing some non-covid virus stories of your own. Hugely helpful to me.
Let’s get a little micro today and see how that may fall into the macro picture. The S&P 500 Index was lower for a third straight session Wednesday amid increasing concerns about economic growth and the ongoing spread of Covid.
The Federal Reserve’s Beige Book report showed that economic growth downshifted slightly to a moderate pace from early July through August, largely due to a pullback in dining out, travel and tourism because of consumers’ safety fears. Mega-cap technology stocks Apple Inc. and Facebook Inc. reversed prior-session gains and weighed heavily on the Nasdaq 100 Index (which set its own new high Tuesday – the internal crosswinds in this market are stiff). Meanwhile, money managers from Morgan Stanley to Citigroup are turning negative on equities, raising doubts that markets are ready for an eventual tapering of central-bank stimulus. The dollar pared earlier gains, while Treasuries recovered Tuesday’s losses. The debt deluge continued, as investment-grade borrowers priced 17 deals after setting the single-day record with 21 on Tuesday. Updating Tuesday’s Morning Note comment on bond yields during this week of record issuance; the US10yr is 1.32% this morning – unchanged from the start of the week.
Macro translation, it would appear that the equity market is experiencing a pullback. As we have seen so many times during bull markets over the past few years, a pause (the S&P is only off 48bps this week) is the new correction. I suspect that’s what we’re seeing in markets now. No note tomorrow, we’re on the 4-day week schedule due to LDW – have a great first fall weekend.
Be well,
Mike