Confidence In The Economy

Macro Perspectives: Wed 21 Jul 2021

We had a bounce back in markets yesterday. By midday, stocks had fully recovered from the slide of the day before...Let's take a look at the updated chart from my note yesterday...

Interestingly, following the declines of Monday, driven by news of rising covid cases and increasing global restrictions, the big movers of yesterday’s bounce back (within the S&P 500) were some of the most vulnerable to a lockdown environment: cruise lines, airlines, retail and restaurants.

My takeaway: That shows confidence from the investment community that the environment for stocks and the economy will continue to run full-tilt (no hiccups).

Another interesting chart, with a significant trend that remained intact through the broad declines - Oil.

The news from OPEC+ on Sunday that a standoff between the Saudis and UAE has ended, adds to the bullish outlook for oil (still a supply/demand mismatch). With that, this knee-jerk decline on concerns about global lockdowns, presents a buying opportunity for oil and oil and gas stocks.