Market Notebook


Both global equities and the bond complex consolidated last week.

As expected, the Conference Board’s Leading Economic Index for the U.S. decreased in April. The following is an excerpt from The Conference Board’s press release. “Business conditions may recover for some sectors and industries over the next few months,” added Bart van Ark, Chief Economist at The Conference Board, “But, the breadth and depth of the decline in the LEI suggests that an imminent re-opening of some sectors does not imply a fast rebound for the economy at large.” The release can be found via this link:

The coming week is a holiday shortened trading week with a number of economic data releases. Market participants will be watching for clues as to the pace of recovery in economic activity in the U.S.  Anecdotally, it appears as though people are eager to get back to living a normal, Pre-COVID-19 lifestyle. If true, economic activity could snap back quickly. Unfortunately, COVID-19 still exists in a world without a vaccine so additional waves of infection are possible. Additionally, structural damage has been done to the economy and many employers will likely be slow to normalize operations. The existing situation sets up a tale of two worlds. In the first world, consumers will begin to feel better as life returns to normal. A number of companies will see financial performance snap back quickly. The second world, is a world in which corporate profits will be constrained for months if not years. U.S. equity market participants appear to be pricing most equities as if they operate in the first world where things will be better quickly. Be wary of those companies with lines of business in the second world where it will be a struggle to return to Pre-COVID-19 levels of profitability.

Note, the performance numbers and chart for AMLP are incorrect. The price data does not properly reflect the recent reverse split for AMLP. It is expected that the data will take the reverse split into account by the time the next market notebook is published.

Happy Memorial Day weekend.


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