Strategists say that Apple and Amazon dominate an economy ‘without mouth or nose’


This was a fairly good performance for America’s technology giants.

Google Original Alphabet GOOG,
+ 0.62%
Beat earnings and revenue expectations, although the search giant’s year-over-year income fell.

What benefits from all this is that their products and services can be used from home, and in the absence of real-world shopping and comfort competition.

It is also an economy “without mouth or nose”, according to Dhaval Joshi, head European investment strategist at BCA Research. That is to say, physical disturbances and the mandatory requirements of wearing masks prohibit any activity that requires the use of your mouth and nose for proximity to others.

In the US, hospitality, retail and transportation account for 12% of economic activity, he notes. Assuming physical disturbances and the use of face masks force them to operate at two-thirds of the capacity, the economy will lose a tolerable 4% of activity. However, 25% of all workers work in those labor-intensive sectors – so at two-thirds of capacity, more than 8% of all jobs are eliminated, or 10% in a less favorable scenario.

Joshi says, due to the government’s efforts to provide employment to employers, permanent unemployment will continue to rise, leading to a 30-year bond yield decline. Given the tight relationship between bond yields and bank share prices, bank stocks should decline.

The winners, he points out, are not European, which is why there is a better increase in US profits. Amazon, Apple, Microsoft MSFT,
-0.07%
And Netflix NFLX,
+ 0.27%
Stoxx Europe alone accounts for more than half the underperformance of the 600 SXXP,
+ 0.48%
Vs S&P 500 SPX,
-0.37%
this year.

Joshi rejected the argument that Robinhood Day traders are creating a speculative frenzy in the state of growth, stating that all of the recent price moves can be explained by both flexible gains and collapsing bond yields.

While there is always the possibility of a sudden end to the epidemic, he is not expecting, on the belief that a reliable vaccine will not be available until next year. “This Ultramong Bond Will Suppress TMUBMUSD30Y,”
1.195%
Supports growth in yields, and at least, overweight relative to other parts of the stock market.

The buzz

In addition to the technology earnings, Thursday night also fetched good earnings from automobile manufacturer Ford F
-2.60%
And videogame maker Electronic Arts EA,
+ 1.95%,
During the travel service Expedia EXPE,
-0.45%
Disappointed after a poor forecast.

White House Chief of Staff Mark Meadows said the Trump administration would support unemployment benefits of an additional $ 600 a week, which are scheduled to expire on Friday.

France, Italy and Spain reported double-digit declines in GDP for the second quarter. In the American economics calendar, releases have been released on personal income, employment cost index, Chicago Purchasing Managers Index and Michigan Consumer Sentiment Index.

market

Nasdaq-100 Futures NQ00,
+ 1.14%
Banner Tech rose after the results, while the S&P 500 ES00,
+ 0.27%
Futures higher

Gold GC00,
+ 2.77%
And silver SI00,
+ 4.70%
Both were promising on Friday.

Pounds GBPUSD,
+ 0.45%
Was trading at over $ 1.31 and has advanced 5% over the previous month.

Chart

The permanent portfolio, which equals stocks, bonds, gold and cash, had its best run in 40 years, explains Michael Batnick, research director at Ritholtz Wealth Management and author of the blog Irritable Investor. While this portfolio weakens stocks over the long term, it is more stable, a monthly decline of just 5% in the recent bear market, and less than 15% in the 2008–09 global financial crisis. “With bonds giving you 1-2% and cash giving you 0, I wouldn’t expect much from here. The good news is that if history is of any guide, you should not expect much about it.

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