Asteroid?
Posted on Sunday, July 19th, 2020
What about the kids? Are they going back to school? That seems to be the big topic of debate in the Reilly house. Our youngest is about to head off to band camp next with with 180 of his closest friends. He was named Brass Captain! Not bad for the Junior to be. Needless to say, we are very proud. A couple of weeks ago, in our last blog before our Quarterly Letter, we mentioned that it seemed that the virus was making a comeback. It certainly has. We hold the folks at Georgia Tech in very high regard. One of the math whizzes at Tech took a shot at the virus this week and his website is addicting. If you plug in your county – we live in Forsyth – and a gathering of say 50 people it spits out a percentage chance that someone there will be positive for Covid. In Forsyth County if you gather together with 50 people (like we did today at the golf club) there is a 58% chance that someone in that group has Covid. In Myrtle Beach its 99%+. Gonna have to stay away from Myrtle Beach. Suffice to say, it’s going to be a long autumn in the Reilly house.
While we try to stay out of the politics we are wondering why our governor has chosen to die on this political hill on the subject of masks vs. no masks. What a strange year?! What is the Vegas line on what comes next? Are aliens the favorite or are we looking at an asteroid? We think a live fire exchange in the South China Sea seems like a logical next move for 2020?
We are not taking on additional equity exposure at this time but are certainly looking for an opportunity. Keep in mind, the central bank put is alive and well. The Federal Reserve will do whatever it takes to support this economy and market given the arrival of Covid. A market selloff based on a second wave would give them the excuse they need to provide more support. Could the next couple of weeks provide that opportunity? The bonus unemployment benefits from the CARES Act run off as of July 31st. Could Nancy and Mitch drag their feet and push this past the due date and scare the markets? Why waste a potential crisis?
Technology has led the way on this rebound but it does look like it might be time for a breather for tech. This week the bulls piled into small cap and value while they fled from growth and tech. That rotation has been rumored for some time as value has under performed for well over a decade. If markets can make the rotation from tech to value and small caps it will give new life to the rally. That would match up with a lower US dollar and higher inflation.
We are still stuck in a wide trading range on the S&P 500 between 3000 and 3250. The chart gurus would say that a trading range will most likely break out the way that you came into it. That would be higher still and measure out to 3500. Not saying it will – just telling you what the book says. Trends are hard to break. It may not make sense in light of the looming bankruptcies/ foreclosures and unemployment but the market has the final say and its verdict stands. We are agnostic about why the market is up or down. We just want to be right for our clients. It’s about price nothing more.
Stay safe.
I think we aspire less to foresee the future and more to be a great contingency planner… you can respond very fast to what’s happening because you thought through all the possibilities, – Lloyd Blankfein
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. – Winston Churchill
To learn more about us and Blackthorn Asset Management LLC visit our website at www.BlackthornAsset.com .
Disclosure: This blog is informational and is not a recommendation to buy or sell anything. If you are thinking about investing consider the risk. Everyone’s financial situation is different. Consult your financial advisor.