Broker Check


THIS WEEK'S UPDATE

| August 03, 2021
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THE WEEK ON WALL STREET

The stock market posted small losses last week despite a very strong showing by

corporate America. The Dow Jones Industrial Average slipped 0.36%, while the

Standard & Poor’s 500 lost 0.37%. The Nasdaq Composite index dropped 1.11%

for the week. The MSCI EAFE index, which tracks developed overseas stock markets,

jumped 1.51%.


STOCKS TAKE A BREATHER

There were plenty of excuses for stocks to retreat last week. News of a new phase in

Chinese regulators’ crackdown on large, private-sector companies, a decline in new

home sales, and concerns about the Delta variant weighed on investors. After

opening the week adding to record highs, stocks turned lower despite an earnings

season that continued to impress. Solid earnings from the mega-cap technology

companies were not enough to propel stocks higher. Instead, stocks slipped

throughout the week, fighting uncertainty over Chinese stocks, a disappointing

second-quarter Gross Domestic Product number, and a retreat in technology shares

they reset to fresh company guidance.

CHINESE CRACKDOWN

Chinese technology stocks were under pressure last week as Chinese regulators

continued their push to rein in large companies for reasons that include data

security, abusive corporate behavior, financial stability, and curtailing private-

sector power. Chinese government actions raised new levels of concerns about

which industries may next fall in the crosshairs of regulators. American investors

have plenty of exposure to Chinese companies. Substantial losses were felt by

mutual funds and hedge funds, which account for about 86% of the holdings in the

over 200 U.S.-listed Chinese companies whose aggregate market capitalization

exceeds $2 trillion.


THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: ISM (Institute for Supply Management) Manufacturing Index.

Tuesday: Factory Orders.

Wednesday: ADP (Automated Data Processing) Employment Report. ISM (Institute

for Supply Management) Services Index.

Thursday: Jobless Claims.

Friday: Employment Situation Report.


THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS

Monday: Simon Property Group, Inc. (SPG)

Tuesday: Alibaba Group Holdings (BABA), Activision Blizzard, Inc. (ATVI), Amgen,

Inc. (AMGN), Eli Lilly & Company (LLY), Diageo, PLC (DEO)

Wednesday: Roku, Inc. (ROKU), Prudential Financial, Inc. (PRU), CVS Health

Corporation (CVS), General Motors, Inc. (GM), Etsy, Inc. (ETSY), Electronic Arts,

Inc. (EA), MGM Resorts International (MGM), Match Group, Inc. (MTCH),

Emerson Electric Co. (EMR), Booking Holdings (BKNG)

Thursday: Square, Inc. (SQ), Illumina, Inc. (ILMN), Duke Energy Corporation

(DUK), Albemarle Corporation (ALB), Cigna Corporation (CI), Becton, Dickinson

and Company (BDX), Regeneron Pharmaceuticals, Inc. (REGN)

Friday: Dominion Energy (D).


FINAL THOUGHTS

Earnings season is in full force and most are coming in strong as was expected. The

big headlines are related to the Covid Delta variant. The former director of the FDA

has said that people will get the Covid antibodies one of two ways. They will either

get vaccinated or they WILL catch this highly contagious Delta version of the virus

and mother nature will give them the antibodies. Based on math and the way this

has already played out in Britain and some other countries we will likely see the

infection numbers worsen dramatically over the next week or two, then crest and

start to come back down. The news and the politicians will cry wolf as loudly as they

can the next few weeks, but know this… The market is already looking through

this because it believes in math and science and not ratings hungry media and

politicians.


Per the CDC, fewer than 0.1% of vaccinated Americans are infected with Covid. Of

those, 0.004% are hospitalized and 0.001%have died. Meaning, 99.9% of the

vaccinated are not infected. Thus, this wave of sickness is largely a pandemic of

those without antibodies meaning they haven’t had the virus already or haven’t been

vaccinated.  Fortunately for society, this wave will give antibodies to many

unvaccinated people and will push us closer towards some type of herd immunity

for the time being. For those who have been vaccinated, a booster shot is coming. It

is already being given to the infirm in other countries. So, the bottom line is turn

off the TV and don’t worry.


Make it a great week!

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