NEW BULL MARKET ON THE HORIZON, BOATLOADS OF CASH WAITING TO DEPLOY

August 19, 2020

The HCM-BuyLine® is positive and we are close to the S&P 500 breaking out, which would confirm that a new bull market has begun. There are over 5 trillion dollars sitting in cash, which is an amazing amount of firepower, but that is just the beginning.

HCM-BuyLine®  

SP 500

Look at TLT, the ETF of the 20-year treasury, hitting the top end of the band. Treasury 1-20 years, etc. are hardly paying any interest, and this is many trillions more of money that could, and in all probability will, find its way back into equities.  

TLT

COVID-19 UPDATE:

 Daily cases COLLAPSE to 32,323, -9,500 versus 7D ago and -10,000 versus 1D ago. 

Sweden Back to School

Like our analysis has been saying, it looks like the peak has happened, and new cases along with hospitalizations and deaths are dropping and dropping fast. This is great news for everyone. Sweden, which did not adhere to the lockdown, looks to have had it right. It is too early to say for sure, but the odds are high they were spot on. 
Wuhan Music Festival

Wuhan is just about back to completely normal. The Wuhan Maya Beach Water Park (which typically welcomes 15,000 visitors daily) hosted hundreds of people on Saturday for a giant pool party and concert with no apparent social distancing or mask protocols. Wuhan lifted its strict lockdown in April and reported only around 200 COVID-19 cases in early June after testing nearly all 11 million residents, according to the New York Times. 
Wuhan

The New York Times also previously reported that nearly 94 percent of businesses in the city — which amounts to about 11,000 — had resumed their operations by mid-April. While the city tries to heal economically from the outbreak, its residents will also need time to heal emotionally from the experience, as a major portion of China's COVID-19 deaths came from Wuhan alone.

HOUSING STARTS AND PERMITS SURGE:

Housing starts surged 22.6% in July, its third gain in a row, and the most since October 2016, to a 1.496-million-unit annual rate. The consensus was for a much smaller 4.6% increase to a 1.241-million-unit rate. Additionally, the previous two months were revised up by a combined 61,000 units. Housing starts are still 7.5% below their pre-recession peak, but the strong rebound from the shutdown low in April shows home builders are responding to stronger housing demand which has been boosted by record-low mortgage rates. The jump in builder confidence to a record-matching level in August supports a continued upward trend in housing starts for the near-term.

The increase in starts last month was led by a 56.7% surge in multifamily construction. Single-family was up by a smaller 8.2%. But both sectors posted three consecutive gains. All four regions increased. Building permits, a harbinger for starts a few months down the road, jumped 18.8%, the most since January 1990, to a 1.495-million-unit annual rate. They are only 2.7% below their pre-recession high, indicating a potentially shorter path to full recovery than housing starts. The leader in permits last month was the single-family sector, which rose 17.0%, the most since July 1980. As with starts, permits increased across all four regions.

Wealth Watch

Sign up for our weekly news to hear from CEO and portfolio manager, Vance Howard.