Connecting The Dips

Connecting the dips.  Stocks snapped a losing streak yesterday as investors bought beaten down technology shares. Chairman Powell and Secretary Mnuchin reminded Congress that more stimulus would be needed to support recent economic gains.

N O T E W O R T H Y

A different kind of love.  I am one of those people who actually likes grocery shopping… truth be told.  Maybe it’s just part of my daily ritual, which is somewhat comforting, even in these strange times.  I stop at one of several of my local stores on the way home from the office, which these days means leaving my home office after the market closes to head to the grocer.  Though my time at the market is meant to help me wind my workday down and help me cross over into husband/dad/dog-walker mode, I can’t help but notice things related to the economy, the markets, and my job.  Let’s begin the journey with Whole Foods, one of my go-to’s.  The company was acquired by Amazon in the summer of 2017.  Being a digital… and practical sort of person, I have always embraced Amazon for whatever I could.  I was also a fan of Whole Foods, partially because of its convenience, but mostly because the company carried the types of things I generally liked.  I also want to point out that the store formats were most often smaller than the major grocery chains and the aisles were less crowded with shoppers.  Less crowded is more conducive to the post-market wind-down I seek.  So one can say I like Amazon and Whole Foods.  That said, I was eager to see what would come out of the merger. It was kind of like introducing two of your friends and watching them get married. Side note, I haven’t had a good track record in that department, though it ultimately worked out for them.  Things didn’t change much right after the merger, but in late 2018 I did start to notice some changes.  I started to notice that a number of shoppers were wearing the same light-blue T-shirts, which was not a coincidence… they were the the first wave of personal shoppers, tasked with picking and packing online grocery orders for customers to pick up.  Their numbers grew significantly throughout 2019 and a whole new brigade of dark-blue T-shirt wearing folks swarmed the lobby area to pick up the neatly stapled, trademark paper bags for home delivery.  By the onset of 2020, the store became more crowded than ever I had seen. Thankfully, I still recognized some of the regulars but, at that point, my local retail store, had been overtaken by Amazon employees shopping for online customers. Once the pandemic struck, as one might expect, the change-over was accentuated.  The store seemed to become a sort-of Amazon fulfillment warehouse.  I wasn’t daunted, as I am a big fan of the digital revolution – shopping not your thing, then by all means go online and get it done.  Still, I was sure that once things eased up a bit with WFH (work from home) and lock-down restrictions, the aisles would begin to fill back up with in-person shoppers… but they didn’t. Way back in the dot-com bubble days, the world was introduced to Webvan.  The company aimed to allow customers to order their groceries online and have them delivered.  Well, you probably know the next chapter of Webvan… there wasn’t one.  The great idea ended in bankruptcy nearly 3 years after its launch. Since its demise in 2001, others tried, some failed, and some were able to continue to function, though not wildly successful.  The world was just not ready to make the digital jump.  E-commerce has been growing significantly in recent years as more and more tech-savvy generations turn to their computers and phones for just about everything.  Not surprisingly, the 50+ demographic, who controlled the biggest share of disposable wealth, were the last holdouts… until COVID.  The topsy turvy world that emerged in lockdown forced the holdouts to give e-commerce a try.  Guess what? They like it.  The economy has been evolving since the beginning of time.  How we do business, the products we use, the ways in which we interact, etc are always evolving.  The terrible events of the past 6 months have simply accelerated that evolution.  It is no wonder that investors are clamoring for shares of technology, solar, pharma, and electric vehicle companies.  They are the undeniable future.  Not all will be successful, but the evolution is real and it is likely here to stay.  I am still a holdout when it comes to ordering my groceries online.  It’s not that I don’t trust it or that I believe that the model is flawed.  I just find comfort at my local grocery store, even if I have to share the aisles with professional shoppers.

THE MARKETS

Stocks rose yesterday as investors found their way back to cheaper technology shares.  The S&P500 rose by +1.05%, the Dow Jones Industrial Average climbed by +0.52%, the Russell 2000 advanced by +0.79%, and the Nasdaq Composite Index jumped by +1.71%.  Bonds rose and 10-year treasury yields added +1 basis point to 0.67%.

NXT UP

– FHFA House Price Index (July) may have risen by +0.5%, down slightly from the prior month’s +0.9% growth.

– Market US Manufacturing PMI (Sept) is expected to have risen to 53.3 from 53.1, while Services PMI (Sept) is expected to have fallen slightly to 54.5 from 55.0.

– Fed Chairman Powell will once again appear before lawmakers. Other Fed speakers include Mester, Evans, Rosengren, Kashkari, Bostic, Quarles, and Daly, all throughout the day.  Lots of talk… we will be listening.

daily chartbook 2020-09-23