Economic Sunrise?

We have a big economic calendar with reports on inflation, small business optimism, retail sales, consumer confidence, and unemployment claims. I expect the data to continue occupation of the back seat. The election news is easy to write about, and financial media are taking the bait. Anything about the pandemic is newsworthy. Most important will be the fate of moves to extend economic assistance to the unemployed and others.

Many pundits have been unduly pessimistic about the economic rebound. That has also been my viewpoint. I am accepting a reader suggestion to think carefully about my conclusions. What would make me bullish? Put another way:

Are we witnessing an economic sunrise?

Last Week Recap

In my last installment of WTWA, I raised concerns about the accuracy of the upcoming payroll employment report. I described the problems more completely in a Wednesday preview and another post after the release. Employment was a big topic during the week, of course, but no one else has joined in about my specific concerns. The actual job count will be available in about six months.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski’s version. Her chart combines much of what interests us in one picture.

Once again, there was little change in fundamental values or news during the week.

The market gained a strong 2.4% on the week with a trading range of only 2.1% (after Monday’s gap opening). My weekly indicator snapshot monitors the actual volatility as well as the VIX (see below).

The weekly sector chart shows the sources of the action.

The “recovery” trade is still leveling but remains in “improving” territory. Industrials, financials, energy and materials are all part of that group. Defensive sectors like utilities, consumer, and health, continue to improve. You can watch the progress of the rotation via this chart.