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Weekly Commentary: Bubble Meets Pandemic Consequences

Weekly Commentary: Bubble Meets Pandemic Consequences

For posterity, some numbers: Over the past three weeks (14 sessions), the S&P500 gained 11.5%. The KBW Bank Index surged 36.1%, with the NYSE Financials up 23.9%. The Dow Transports rose 27.2% in 14 sessions, with the Bloomberg Americas Airlines Index up 75.8%.

Over this period, the broader market significantly outperformed the S&P500. The small cap Russell 2000 jumped 19.9% and the S&P400 Midcaps 21.1%. The Philadelphia Oil Services Index surged 50.0%. The Homebuilders (XHB) jumped 26.2% and the Bloomberg REIT index rose 22.5%. The average stock (Value Line Arithmetic Index) surged 25.3% in three weeks.

Over three weeks, United Airlines rose 113%, American Airlines 106%, Norwegian Cruise Line 105%, Royal Caribbean Cruises 85%, CIT Group 86%, Delta Air Lines 78%, Simon Property Group 73%, L Brands 72%, Boeing 71%, Carnival Corp 68%, Macy’s 68%, Alaska Air Group 67%, Kimco Realty 66%, Gap 62%, and Southwest Airlines 60%.

The Nasdaq Composite rose 8.9% over the past three weeks to close this week at all-time highs. The Semiconductors jumped 17.8% to end Friday at record highs. The Nasdaq100 (NDX) gained 7.3% in three weeks to new highs.

June 5 – Bloomberg (Sarah Ponczek): “The latest U.S. jobs report will go down in history as the data that shocked economists. And the market. Forecasts for a drop of 7.5 million in payrolls were met with the reality of a 2.5 million increase in May, supporting the view that the world’s largest economy may be more resilient than previously thought. A stock market already up 40% in a record period of time rallied further, with particular pockets going haywire. From a blowup in the momentum factor trade to a surge in small-cap shares, here’s a sample of what was happening under the equity market’s surface Friday. The momentum factor, which in essence bets that the recent winners will keep on winning, got pummeled Friday. At its lows, a Dow Jones market neutral momentum portfolio that goes long the highest momentum stocks and shorts those with the least momentum dropped 9% — the worst day since at least 2002.”

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