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A Bird's Eye View Blog

Fireside Charts: A Look at the Spring Sell-Off, the Yield Curve Normalizes, and a Covid-19 Update

By:BCM Investment Team | Date:Jun22, 2020 | Category: Equity, Economics, Market Highlights, Fireside Charts

The markets have staged a remarkable comeback since their March lows—the Nasdaq was actually up +10.85% ytd as of Friday's close—but many investors have missed out on those gains. Nearly 20% of investors fled the equity market entirely between February and May, and that number climbs above 30% for the 65 and older crowd. Much has been made about Tech's dominance in the market and it's role in the recovery, but is sector dominance really anything new? Meanwhile, after exhaustive work from the Fed, the yield curve looks to be normalizing as the country begins to inch back toward normal economic activity. But is it strong enough to endure another bout of volatility, Covid-induced or otherwise? Finally, with former Covid-19 epicenter New York City embarking on phase two of its reopening today, we thought it'd be a good time for a pulse check on the pandemic. History shows that second waves are common in pandemics and it's beginning to look like Covid-19 is not going to be the exception. Global counts have reached a new high and yesterday the WHO reported the largest single-day jump on record—more than 183,000. Cases have surged in Brazil, where confirmed cases have passed 1 million and deaths have surpassed 50,000. New infections are also climbing here in the U.S.—despite falling numbers in the Northeast—thanks largely to new outbreaks in California, Texas, and Florida. Summer weather and hot temperatures haven't brought the reprieve many hoped for, so it looks like social distancing won't be exiting the lexicon any time soon. Stay safe out there!



1. Sad, but investors did it again! Sell low and miss the rally. They need discipline via a rules-based process that can avoid this!

6.22 Sad, but investors did it again-2

Source: WSJ Daily Shot, from 6/22/20



2. A great historical perspective...


6.22 a great historical-2

Source: WSJ Daily Shot, from 6/22/20



3. As the yields at the long end quietly rise, will the yield curve continue to "normalize" or will another bout of volatility drive them down again?


Source: The Chart Store, from 6/21/20



4. Globally, Covid cases are still on the rise with ~150,000 new confirmed cases every day...


Source: JHU CSSE, as of 6/22/20



5. Brazil, whose President downplayed the virus, now has almost twice the new daily caseloads as the U.S.. but is ill-equipped to deal with Covid. This humanitarian crisis is not even in the news...


6.22 Brazil whose president downplayed-2

Source: JHU CSSE, as of 6/22/20



6. Here in the U.S., cases have stopped declining and are now back to ~30,000 new confirmed cases /day.


Source: JHU CSSE, as of 6/22/20



7. In the Northeast, where the Governors coordinated their responses, the Covid trends look like this:


Source: JHU CSSE, as of 6/22/20



8. Yet here is California, which now claims the second highest number of cases:


Source: JHU CSSE, as of 6/22/20



8. Here is Texas which, like most of the South, is getting slammed like the Northeast did two months ago...


Source: JHU CSSE, as of 6/22/20



8. Finally, here is Florida. Covid was not supposed to be as virulent in warm climates. Perhaps poor HVAC is causing the outbreaks. Wear masks people!


Source: JHU CSSE, as of 6/22/20





Rallies aren't uncommon during bear markets, and the threat from Covid-19 is far from over as data on a "second wave" roll in. Read “The Anatomy of a Bear Market” by BCM Portfolio Manager Dave Haviland to see how past bear markets have played out and how this one could just be getting started.


Anatomy of a Bear Market




Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are a recommendation to take any action. Individual securities mentioned may be held in client accounts.