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Fireside Charts: Equities Tick Up, the Cost of Stimulus, and COVID-19 Trends

By:BCM Investment Team | Date:Jun15, 2020 | Category: Equity, Economics, Market Highlights, Fireside Charts

Risk-off sentiment seemed to have returned last week following both the market's worst day of trading in months and a warning from the Fed that "the path ahead is extremely uncertain." But returns inched up today with both the Nasdaq and the S&P 500® Index turning positive mid-day. Still, hopes for a v-shaped recovery appear to be growing dimmer. The Fed is certainly taking the long view and have directed more asset purchases toward long-duration bonds. Those purchases aren't coming cheap though; the U.S. year-over-year deficit has tripled thanks in large part to COVID-19 stimulus efforts. The real battle is against the virus itself though, not just its economic impact. Many U.S. states are seeing their infection rates fall, but spikes remain across the country and are preventing the national rate from continuing its established decline. Meanwhile, a surge in EM cases is contributing to climbing global rates and undercutting optimism that heat and sun could help combat the virus's spread. Beijing just re-instituted lockdown following a spike in cases; let's hope the same doesn't become necessary in the U.S.



1. So where are we?

Source: The Chart Store, from 6/14/20



2. Classic retail investor behavior? Fear kept them out of the rally and now we wonder if they're buying near the top...


6.15 Classic retail investor behavior-2

Source: WSJ Daily Shot, from 6/15/20



3. The Fed's latest round ($3.4 trillion) of QE includes a larger share of longer duration bonds.


Source:The Chart Store, from 6/14/20



4. The Federal Government' year-over-year deficit has tripled due to the Covid fight...


Source:The Chart Store, from 6/14/20



5. In the U.S. we have stopped declining and may be headed back up. Patterns across states are inconsistent though; there are 12 states in obvious decline, 13 states in obvious outbreak, 12 flat-to-down but uneven, 13 flat-to-up yet uneven.


Source: JHU CSSE, as of 6/15/20



6. Globally, cases are still rising and there are major outbreaks from Mexico South to Argentina, India, and the Middle East and former Soviet States. These EM healthcare systems are likely to be overwhelmed. And based on the fact that the new outbreaks are in hot, sunny locales, heat and sun do not appear to have a profound effect on Covid.


Source: JHU CSSE, as of 6/15/20



7. Here are the largest ETF sponsors...


6.15 Here are the largest ETF sponsors...-2

Source: WSJ Daily Shot, from 6/15/20





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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.