What Goes Up

Stocks crashed back to Earth this week after a breathtakingly fast rebound from the bear market of February and March. What caused the plunge? And is the rally over?Medley Global Advisors macro strategist Ben Emons and Bloomberg’s Cameron Crise discuss the drivers of the wild week in markets and the hoards of newly minted day-traders who took advantage of the rebound on the latest episode of the “What Goes Up” podcast.Mentioned on this podcast: Hundreds of Thousands of Tiny Buyers Swarm to Insolvency StocksThe Stocks-Only-Go-Up Strategy Falls Into a $2 Trillion DitchSee omnystudio.com/listener for privacy information.

As lockdowns are eased across the country, Americans are slowly but surely getting out of their homes and engaging with the world outside again. That provides some opportunities for investors to benefit from the next group of stocks that will perform well, according to Shawn Snyder, head of investment strategy at Citigroup’s Personal Wealth Management unit. Still, some shares that did well during the lockdown represent the “future of America” and aren’t just flashes in the pan, he says.Mentioned in this podcast: The Really Big Stock Bull Case Says Fed Stimulus Doesn’t Go AwayBears Thwarted Again by Stock Market That Believes in RecoverySee omnystudio.com/listener for privacy information.

Investors across Wall Street are beginning to wonder if the risk rebound has further room to run. Fed policy is extremely stimulative, economies are reopening, and slices of the market hit hard by Covid-19 are joining in on the rally. But GMO, the famous money manager founded by Jeremy Grantham, isn’t buying it.Mentioned in this podcast: Investors Pile Into Stocks That Win in a Full Economic RecoveryU.S. Corporate Bond Sales Smash Record, Soaring Over $1 TrillionBored Day Traders Locked at Home Are Now Obsessed With OptionsSee omnystudio.com/listener for privacy information.

What explains the resiliency of the U.S. stock market, despite the worst economic data in most of our lifetimes? Susan Schmidt, head of U.S. equities at Aviva Investors in Chicago, says the market is already looking ahead to next year. That doesn’t mean there won’t be some more volatility in the near term.Mentioned in this podcast: U.S. Equity Markets Stubbornly Ignore the Doom EverywhereExtreme Behavior Is on Display Everywhere in the Stock MarketBlack Swan Author Spars With Quant Legend Over Tail Risk HedgesSee omnystudio.com/listener for privacy information.

It was 10 years ago this month that the S&P 500 dropped 5% in four minutes. Now, the infamous day is known as the Flash Crash of May 6, 2010, and a decade later global markets are again facing extreme volatility – albeit in a different way. Joining the “What Goes Up” podcast this week is Liam Vaughan, the author of a new book, “Flash Crash: A Trading Savant, a Global Manhunt, and the Most Mysterious Market Crash in History,” to chronicle the historic day and how a 36-year-old day trader got caught in the middle of it all.Also on the episode is Jafar Rizvi, portfolio manager of Harding Loevner Global Small Companies & International Small Companies Funds, who helps explain how to navigate investing in global small cap firms in the wake of the coronavirus.Mentioned in this podcast:The Work-From-Home Trader Who Shook Global MarketsStock Market’s Winners Hint at Gloom Rather Than Quick ComebackSee omnystudio.com/listener for privacy information.

This is a year when unthinkable events have become commonplace. That has some investors wondering if the Federal Reserve could end up making what was previously an unthinkable move: purchasing stocks. Vincent Deluard, global macro strategist for brokerage INTL FCStone, discusses.Mentioned in this podcast:With Stocks Buybacks Halted, We’ll See How Much They MatterStock Fear Gauge Falls to Nine-Week Low After Topping 2008 HighsSee omnystudio.com/listener for privacy information.

The U.S. Treasury is auctioning a dizzying amount of bonds to pay for the government’s economic relief efforts. Will the market be able to digest this mountain of supply? Wells Fargo Securities macro strategist Zachary Griffiths discusses.Mentioned in this podcast:Bond Traders Signal the Path to Reopening Will Be Long and Bumpy​​​​​​​Kudlow Says China Will Be ‘Held Accountable’ for CoronavirusSee omnystudio.com/listener for privacy information.

As several states take tentative steps to reopen their economies following lockdowns to slow the spread of Covid-19, the big question for investors is whether a V-shaped recovery is in store. Baird strategist Michael Antonelli discusses why he believes the economic re-openings won’t be greeted with a rally in stocks.  Mentioned in this podcast:Bad Data Is a Given for Wall Street Gaming Out Lockdown ExitWhat an Oil ETF Has to Do With Plunging Oil Prices‘They Don’t Know What to Say’: Company Earnings Add to ConfusionSee omnystudio.com/listener for privacy information.

They say every crisis is also an opportunity, and some trend-following investment strategies are proving that true by reaping strong returns amid the chaos in markets triggered by the Covid-19 pandemic. AlphaSimplex Group’s Managed Futures Strategy Fund is up more than 7% in 2020, reaping what the firm’s chief research strategist Kathryn Kaminski refers to as “crisis alpha.” Kaminski discusses how trend following works and how the firm’s strategy saw the crisis brewing in other markets before it sent equities into a tailspin.Mentioned in this podcast:Crisis or Correction? A Quant’s View of the Coronavirus Don’t Feel Too Relieved by the Bounce Back in Stocks Wall Street’s Bulls Drive Epic Market Split From Grim Reality The Average U.S. Stock Is Catching None of That Megacap MagicSee omnystudio.com/listener for privacy information.

The Covid-19 virus is messing with all our heads, and that can cause investors to make some classic mistakes. Meanwhile, government stimulus efforts could lead to some skewed incentives for consumers and businesses. Edward Jones investment strategist Nela Richardson, who holds a doctorate in economics, gives her diagnosis of the role behavioral economics plays in the pandemic.Mentioned in this podcast: A Bull’s Conundrum: Rally In Stocks Is Built on Staying InsideSee omnystudio.com/listener for privacy information.