Weighing The Week Ahead: Sustaining A Fragile Recovery

Jeff Miller profile picture
Jeff Miller
38.35K Followers

Summary

  • We have a big economic calendar in a holiday-shortened week. Pandemic news has no calendar.
  • Economic data show a recovery, but the market does not seem convinced.
  • Investors should consider the reasons behind the fragility of the economic recovery.
  • Part of the issue is sorting through pandemic mythology.
  • I try to help with that and also explain why I remain bearish.

The economic calendar is a big one, compressed into a holiday-shortened week. Market participants will be checking out shortly after the Thursday morning jobs report for an extended weekend - somewhere! Employment data is the focus, but ISM manufacturing, consumer confidence, industrial production, factory orders, pending home sales, and auto sales are also all on tap. Everything except auto sales is predicted to increase smartly.

The economic news is encouraging, but the worry continues:

Can the fragile recovery be sustained?

Last Week Recap

In my last installment of WTWA, I brought together evidence about the mixed messages facing investors. I expected that to be a focus for the week and it was. The chart for the week displays the market reaction, confirmed but good economic data and poor pandemic data. That tension will not end soon.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski's version, which provides a lot of key information in a single look.

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The recent uptrend was interrupted by news of an increase in COVID-19 cases as well as Fed restrictions on bank dividends.

The market declined 2.9% on the week with a trading range of 5.0%. My weekly indicator snapshot monitors the actual volatility as well as the VIX (see below).

Here is the updated tracking for sectors. Most of the trends continued on a weekly basis, but there were major deviations on the "down" days.

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Noteworthy

Statista draws upon Harvard research using credit card data to look at year-over-year changes in consumer spending.

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The News

Each week I break down events into good and bad. For our purposes, "good" has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news -

This article was written by

Jeff Miller profile picture
38.35K Followers
Seeking Alpha mourns the passing of Jeff Miller, on May 7, 2021. During his time at Seeking Alpha, Jeff attracted a following of close to 40,000 readers and published more than 1,500 articles. He was a portfolio manager at Incline Investment Advisors, LLC. Jeff also was President of NewArc Investments, Inc., and served as a university professor.....................................................................................................................................Jeff is Portfolio Manager for Incline Investment Advisors, LLC.,manager of both individual and institutional investments. A registered investment advisor, he was formerly President of NewArc Investments, Inc. Jeff is a former college professor with a hands-on, real world attitude. His quantitative modeling helped inform state and local officials in Wisconsin for more than a decade. A Public Policy analyst, he taught advanced research methods at the University of Wisconsin, and analyzed many issues related to state tax policy. Jeff began in the financial business as Research Director for a trading firm at the Chicago Board Options Exchange. He investigated anomalies in the standard option pricing models, taught classes for beginning options traders, and developed new forecasting techniques. In 1991 he established a general research consultancy, working with professional traders at all of the Chicago financial exchanges. In 1998 he started NewArc Investments, Inc. Jeff has a commitment to the specific needs of individual investors. It is not a one-size-fits all approach, but one that emphasizes the unique circumstances of each client. Jeff also serves on the board of a small technology company. He occasionally serves as an expert witness in legal cases involving financial markets and hedging.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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