What's Tech Telling Us?

Macro Perspectives: Mon 14 Sept 2020

The tech giants have all given up significant ground over the past 5 trading days, and as a proxy on global risk appetite and the global economy, broader markets have followed the lead of the big tech giants.

With that, let's take a look at the chart of Apple, and some (eye sight) analysis on the story...

The past eight trading days are similar to the first leg of the Covid-driven decline. That was back in late February, when Apple dropped as much as 36% from peak to trough, until it was turned by the Fed intervention on March 23. I know I’m comparing this move to the onset of global Pandemic, yet with no catalyst - that seems very aggressive.

What's notable in this Apple chart, and in the chart of many of the other tech giants, is the big spike in late July. That's the day that followed blowout earnings for Apple, Amazon, Facebook and Google, with Apple announcing a 4 for 1 stock split. At that time, the hysteria from the media and the politicians about a "second wave" of the virus was running high, and the tech giants were performing like a global store of value.

There are trillions of dollars of fresh money printed around the world. When the outlook looks grim on the virus, plow your money into the tech giants as relative safety - the monopolies only get stronger and more powerful in a prolonged lock down scenario - Q2 earnings confirmed it.

But a little more than a month later, and the perception surrounding the virus outlook has improved dramatically; schools have opened and sporting events are underway. It looks like the post Q2 earnings money (that flooded in) is moving out.