The Week That Was on Wall St. – June 15th – 19th

Hello BBT community,

I hope it was an amazing week for you and that everyone reading this roundup was able to keep it all green. 84 days after the stock market hit rock bottom on March 23rd, the S&P 500 was up 44.5%. This is more powerful than the surge we saw after the Great Recession’s lows of March 2009. In addition, last week, the Nasdaq made an-all time high, the first such peak in the middle of a recession since November of 1982! As well, both the Consumer Price Index and the core CPI (this is the Consumer Price Index minus food and energy) have been negative for three months in a row. This is a first in the history of the CPI. Yes, we are in the midst of one of the greatest recoveries and this week certainly did not disappoint. So, let’s get into it.

What a week! Before the week started, it appeared that the rally was over and the bears were finally getting the pullback they desperately needed. On Monday morning, the market sold off over 2% on what appeared to be yet another red day, which would have made it three days in a row. Luckily, thanks to the Fed announcing that they are planning to buy up to $250 billion worth of corporate bonds in order to provide liquidity, the market rallied and finished the day in the green. And that, my friends, is why I decided to make the theme of this week’s roundup: “do not fight the Fed”.

Tuesday was another green day due to more positive economic news. Retail sales in the U.S. had its biggest monthly increase ever, up over 17% for the month of May. This once again showed that the economy is starting to recover while the reopening takes place. A “super” accommodating Federal Reserve, along with positive economic data, is a perfect reason for the markets to go up.

On Wednesday, trading in Hertz Global Holdings Inc. (ticker: HTZ), the bankrupt car rental company, was halted after the SEC blocked their plans to sell shares. It would have been crazy for anyone to buy these shares as more than likely the proceeds from common equity would have strictly served the more senior debt holders. It might be called a “genius” move by management, but it was wisely stopped by the folks at the SEC.

There was more good economic news on Friday when the detailed unemployment numbers for May were released. Marketwatch.com reports that the seasonally adjusted unemployment rate fell in 43 out of the 50 states, thanks to the reopening of the economy. Sadly though, the U.S. national unemployment rate for May was at a historic level of 13.3%.

Almost all sectors finished higher this week, with Healthcare and Technology leading the pack.

I would like to end this week’s market roundup with a quote from hedge fund manager Larry Hite: “… throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.” If you have been following me over these past few years, you will know that I also very strongly believe that risk management and a sound trading psychology are some of the most important skills to have as a trader.

Do enjoy the rest of the weekend. Happy Father’s Day to those Dads out there. I wish everyone a very great and green week ahead. Stay green.

Andrew