Narrative driven musings about the current state of Stonks
What's the narrative? The stock US market seems a little unreal at the moment. Unemployment benefits are running out and a moratorium on evictions is about to end.
Sentiment
Let's see how this plays out and try to gauge sentiment in the US over the last 12 months via Google Trends:
Search for "Unemployment" (blue) picks up from the 8th of March, reaches its peak on the 29th of March.
Searches for "Bankruptcy" (red) remain more or less stable over the trailing 12 months and are dominated by singular events like Hertz car rental or 24 Hour Fitness.
It looks like people are more worried about their jobs than the broader economy.
Stonks
Beware, the stock market is not the economy. But. Let's look at it anyways because it is a reasonable proxy for what is going on, since it is a significant part of the economy and it shows what kind of expectations are being thrown around.
The S&P 500 looks very top heavy YTD:
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FANMAG (Facebook, Amazon, Apple, Microsoft and Google): +35%
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S&P 500: +2%
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S&P - FANMAG: -5%
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FANMAG market cap is making up 22% of the index. The last top was 18% - in 2000
Tesla is not part of the S&P 500 - yet. With this fourth profitable quarter it ticks all the boxes for inclusion. The swing to a positive net income (GAAP) of $104 million is mostly attributable to selling regulatory credits to the tune of $428 million in Q2, which is solely at the discretion of management.
In order to find out what the participation of the rest of the flock looks like we will take a look at the Advance/Decline Line:
A/D Line looks a little toppy but no diversion for now.
A/D Ratio is low but more or less constant.
Conclusion
It all looks a little dicey but leaves enough hope for conditions to keep improving over the next 2 months.
Looking pretty good, considering we are struggling through 2020.
Granted, central banks around the world are lending a helping hand by buying massive amounts of debt.
This is not hard hitting journalism. It is an attempt to find anecdotes for a narrative. This information is useless, but it might be educational when everything has gone the way all things 2020 go.
