Weekly Market Commentary

October 12, 2020

 

The Markets

 

‘Maybe’ Was Enough For Investors

Major U.S. stock indices finished the week higher and global indices were bullish on Friday because of U.S. stimulus talks, reported Financial Times.

Earnings Season Is Upon Us

Another factor that influences investors is earnings season, which begins this week. During earnings season, companies communicate how profitable they were during the previous quarter.

Third-quarter earnings estimates for companies in the Standard & Poor’s 500 Index remain subdued. The estimated earnings decline for the S& P 500 is -20.5 percent.

While that is a significant decline, it is an improvement on -25.3 percent, which was the June 2020 estimate for third quarter earnings and also an improvement on second quarter’s -31.9 percent. My takeaway is that the data is improving each quarter so far which is good news.

Medical Update

Certainty about earnings may improve when a treatment or vaccine for the virus becomes available. The Milken Institute reported there are 318 treatments for COVID-19 and 213 vaccines in the works. Thirty-five of the vaccines are in clinical trials.

Where Is Everyone Going?

You may have read Americans are moving out of cities to escape the coronavirus or violent protests. During the past few months, pundits have said things like, “…the coronavirus pandemic has shifted attitudes about city living, altering the dynamics of the real estate market for years ahead.”

Marie Patino of Bloomberg CityLab decided to look at the data and see if it was true. She gathered information from moving companies, real estate aggregators, and real estate consultants.

As it turns out, people are leaving cities – two cities in particular.

Patino wrote, “According to [moving company] data, between May and August 2020, move requests out of New York City to any destination were up 45 percent, and in San Francisco, up 23 percent, compared to the same time last year.”

Where were people moving?

Some were moving to other cities, continuing trends that had been identified before the pandemic arrived. For instance, San Franciscans began to migrate to Seattle before 2020. Other top destinations for San Franciscans this year have included:

  • Austin, TX
  • Chicago, IL
  • New York, NY
  • Boston, MA

Likewise, New Yorkers had been moving to Los Angeles and the west coast prior to 2020. This year, they also have favored:

  • Atlanta, GA
  • Tampa-St. Petersburg-Clearwater, FL
  • West Palm Beach-Boca Raton, FL
  • Orlando, FL

One real estate aggregator’s 2020 Urban-Suburban Market Report found, “Both urban homes and suburban homes are selling more quickly now than they were in February, and the percent change in time on market has been nearly equal for both classifications. The share of homes selling above their list price in suburban areas vs. urban areas exhibit the same trend nationally.”

 

Focus On The Positive

“Information is the oil of the 21st century, and analytics is the combustion engine.”

–Peter Sondergaard, Business executive

 

Best regards,

Bill Spalding