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Morning Commentary

MEGA-CAP CHARGE

By Charles Payne, CEO & Principal Analyst
9/7/2021 9:42 AM

Last week was a good one for the market as market breadth improved dramatically, but more investors opted to get on the bandwagon of mega-cap growth stocks.

It has to be noted that defensive sectors outperformed significantly. No Wall Street expert comes on TV to say they have a barbell of growth and defense, yet that has been the magic combination.

S&P 500 Index

+0.58%

 

Communication Services XLC

+0.89%

 

Consumer Discretionary XLY

+0.92%

 

Consumer Staples XLP

+1.46%

 

Energy XLE

 

-1.40%

Financials XLF

 

-2.38%

Health Care XLV

+1.65%

 

Industrials XLI

 

-0.31%

Materials XLB

 

-0.67%

Real Estate XLRE

+4.06%

 

Technology XLK

+0.86%

 

Utilities XLU

+1.42%

 

Internals Improve

Buyers who aren’t chasing mega-cap growth are moving down the Technology and Communication Services food chain, looking for opportunities. Market breadth was positive everywhere, but clearly, it’s about momentum names.

Market Breadth

NYSE

NASDAQ

Advancers

2,008

2,821

Decliners

1,481

1,897

New Highs

460

476

New Lows

114

194

Up Volume

9.7 million

11.9 million

Down Volume

8.5 million

7.9 million

Sell in May & Go Away

A lot of folks make decisions based on seasonal trends or historical trends, but these are, for the most part, not fundamental reasoning. Still, when things get wobbly, someone will remind folks that it’s natural and could apply some directional push/pull. Septembers always have been tough months in the first year of a new President, so keep an eye out for this observation to be made over and over again.

Portfolio Approach

There are no changes on the Portfolio Approach.

Today’s Session

Welcome back…to fresh anxieties.

What will happen now that millions of additional unemployment benefits have run its course?

What’s the deal with the Delta variant as some schools have already shut down?

What’s the Federal Reserve going to do as inflation persist, but the jobs market stumbles?

The way I read surveys and other data on unemployment, I think there will be a delay on folks going back to work. People have saved a lot of money and can still wait out going back to work.  Many are searching for the perfect gig and others holding out for higher pay.  It’s a game of chicken workers are winning but not to the degree relayed in the media.

Plus, that window of opportunity is going to close.

Saving Rate

Vaccine Message

A new survey from Gallup shows a sharp decline in public opinion on how President Biden and the CDC has handled vaccinations.  I think the first mistake was taking the JNJ vaccine off the market, but the bigger mistake was when the White House panicked as the July 4th deadline was approaching and began calling unvaccinated American’s killers and bad-mouthing certain states and voters.

We went from the best vaccination rates among large economies to the middle of the pack and falling fast.

Administration & CDC derailed their own objective

More Americans now disagree (41%) than agree (32%) that the Centers for Disease Control and Prevention (CDC) has communicated a clear plan of action in response to the COVID-19 situation.

This is the first Gallup reading since the CDC in late July changed its guidance on the need for face masks for unvaccinated people in areas of high coronavirus transmission.

Ten Year Yield

The ten-year yield moving higher this morning adding some pressure to stocks especially growth names which were slightly higher overnight.  


Comments
Charles: Nice summation. Where do you see oil & big tech for last 4 months now of 2021?

Bullock Van on 9/7/2021 10:03:48 AM
Great to have you back in your Fox Business chair, Charles.

Dick Hoffman on 9/8/2021 4:31:51 AM
 

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