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Good Morning. After the rally triggered by jobs on Friday, US futures are rising again. The picture is mixed in Asia and Europe.
Let's review the action.
- Asia's main indices in the afternoon trade are solidly in the green. All major indices are higher, led by Japan Nikkei (+1.3%).
- Huawei plans to go on the offensive to get his place as 5G Provider of choice in his key British market. Part of his campaign will be to convince Britain (and the world) that it is not controlled by Beijing.
- Raw climbs after an agreement from OPEC and expand its allies Production cuts.
- The European stock exchanges fell from the gates. The benchmark Stoxx Europe 600 open 0.7% lower.
- Could big pharma get a little smaller? Bloomberg reports Gilead and AstraZenecathat both are working on COVID-19 healsthe tires kick in a fusion. It would be the largest healthcare link ever created a $ 240 billion giant.
- Great Britain is on a collision course with airlines that are angry across the country quarantine Measures for inbound travelers. It comes into force today despite threats from BA, Ryanair and Easyjet to complain about the measure.
- The Dow, S&P 500 and Nasdaq Futures indicate a positive opening. The Dow has just gone through a monster week and has climbed 6.8%, his best track since the beginning of April. I may have to take the Dow 30K quiz again.
- Boeing and the airlines were big winners last week. But Big tech is still the sector that everyone wants to have in their portfolios, especially popular with individual investors.
- What's going on This week's calendar? The fed meets Tuesday and Wednesday. It is not expected Touching prices. We also get key data about that Inflation picture with mid-week CPI and PPI reports and the U. of Michigan Consumer sentiment Report on Friday.
- gold is up.
- The dollar is flat.
- Raw continues to gain ground. Brent is up now $ 42 / barrel.
Let's go to the inbox
On Thursday, ahead of the surprising payroll report on Friday, I posted a survey on Allianz investor sentiment that, at least for me, showed a disjointed view of the future. Investors were largely pessimistic about the economy, for fear of a major recession, but not so afraid that they were forced to suspend the current market rally. I then asked the Bull Sheet readers the question: Has all of fate and darkness – the death toll from pandemics, the sheer number of unemployed, the huge social unrest, the historic deficit spending on bailouts, the collapse of growth –Factor in your investment decisions.
I have received some very interesting feedback that I share here this morning. They have been edited for brevity.
Shares: the only game in town
If everything is down, especially interest rates, is there another game in town, if not the stock market? – YES.
We trust the Fed
I think this rally is an expression of the belief that central banks will effectively stop asset prices. You will act as an almighty buyer if everyone wants to sell. So this is essentially the confidence that no matter what happens, there will be liquidity to exit. To quote Stan Druckermiller: "When the Fed buys bonds, the bonds fall and the stocks go up!" – S.D.
Ignore the headings and stick to the plan
There are absolutely contradictory signs for the future of our economy and thus for my personal portfolio. It is inappropriate for me to maintain the longest bull market in the face of a radical drop in demand due to the pandemic, terrible unemployment, trade wars and unprecedented government deficits and debt. I resist the temptation to jump in FOMO every day. I take a deep breath and remember the lessons from the dotcom crash and the GFC. Stick to my plan. For many months I have been collecting cash every time the market jumps by taking a little more equity off the table. That being said, I'm trying to ignore the economic news, stick to my asset allocation, and wait for the inevitable opportunity to buy when everyone else sells. – R.R.
It's about politics, stupid
The bottom line is that I believe there is a difference between the current stock market recovery and the reality of our political future. The underlying economy is strong, but uncertainty is high. Uncertainty will increase over the summer. Labor markets will continue to suffer. Americans are very uncomfortable with what's next, especially in the northern and western cities, and as a result of the demonstrations and the relentlessly negative news. Politicians – especially in an election year – seem to have an answer: mortgage for the future with borrowed money. For families or countries, this solution is only temporary and can only end in one direction. – S.C.
Buy, buy, buy!
Key to take away: You don't HAVE to hit the ground exactly to make money. I believe investors, including me, may see a further decline in the market, but we firmly believe that it will not fall near the March 23 low. So if you invest now, you feel like you're guaranteed to make a profit. The difficult economic situation and the prospects for real GDP? It's easy, America will recover and the long-term investor (I'm 33) schedule is somewhat irrelevant. We know that it will not be easy, but we also know that we will be back. People really want to spend money even when they don't have it. Buy Buy Buy! —D.T.
The government lifted the last of the key blocking measures on June 3. As I mentioned before, I brought Bull Sheet onto the street. I'll explain more tomorrow, but here's a picture of where this week's shows are coming from.
View of the Sibillini Mountains. Original photo: Bernhard Warner
I'm pretty sure that the sheep are trying to spell "buy Apple". What do you expect? You are sheep.
I wish everyone a pleasant day. I'll see you here tomorrow.
A note from my Fortune colleagues about a timely new initiative:
Many companies are currently speaking out against racial injustices. But how are they doing in their own workplaces? We would like to hear black employees in the corporate world from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
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Correction and Update, June 8, 2020: This post was updated to include the Brent crude oil price as "over $ 42 / barrel".