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Thursday, April 30, 2020
Action Insight Daily Report 5-1-20
Adieu, April
| Thursday's Headlines 1. US markets fall, but post best month in decades 2. Apple and Amazon report mixed results 3. The Fed pledges more support for small businesses 4. Winners and losers of April 5. What to expect in May Markets Closed
 Image Credit: bestdesigns/Getty
Markets Today April marked the month where the U.S. economy and the stock market diverged, and oil prices fell to levels previously thought unfathomable. It was a month that saw the destruction of the labor force in the U.S. and Europe. It was a month where we saw the complications around directing trillions of dollars in government spending and monetary policy procedures towards an economy that ground to halt after running at a healthy trot for more than ten years.
Years from now, we'll look back at April of 2020 and point to it as a pivotal month in the global economy.
At the end of it, U.S. stock indexes posted their best returns in decades. The S&P 500 and the DJIA had their best month since 1987. The Nasdaq and the Russell 2000 had their best month since 2000. Gold posted its best month in four years. Oil had its worst month in history.
More than 28 million Americans filed for first time unemployment claims in the past six weeks, with 3.8 million of those filings coming in the past week. The week-to-week trends are moving in the right direction, but the devastation to the labor force has been substantial. The Federal Reserve continues to demonstrate its monetary policy creativity, which may be the only thing supporting the stock market right now. The economy will need a lot more help, both here in the U.S. and in Europe.
Welcome in, May.  Image Credit: Mumemories/Getty
Headlines:
 chart courtesy FederalReserve
April's Winners and Losers Oil was the undisputed loser of the past month as prices cratered, sending the May WTI contract below zero for the first time in history. Too much supply, no place to put it, and very little demand has threatened the entire sector and leveled the market caps of some of the biggest companies in the world.  Best Performing Countries It's hard to lose when you have the biggest and most profitable companies in your country—especially when investors have an appetite for stocks. The outperformance of Amazon, Facebook, Microsoft, and Google boosted U.S . indexes throughout April, helping deliver a 13% return for the S&P 500 for the month.
If we look at the U.S. vs. some of the other developed economies by comparing the MSCI country indexes, the leadership is clear. That said, many countries had strong returns last month, as central banks helped pave the way for investors to take a walk on the wild side and buy stocks after the bear market mauling in March.  What to Expect in May May will be the month that economies around the world, outside of Asia, slowly try to restart. It won't be a smooth process and it won't go quickly. There are signs of movement in some U.S. states like Georgia and North Carolina, and others are expected to open this weekend. European economies are getting back to work as well, but discretionary spending, travel, and shipping are all depressed. In Latin America, particularly in Argentina, the lockdowns may persist through May.
Any progress on a vaccine and a massive scaling of testing will help bolster investors' enthusiasm, no matter how bad the economic reports get. They will get very bad, but they are also backward looking. Every new day gets us closer to the end of this crisis and the beginning of the recovery, if we do it right.
Sell in May and Go Away? There is a famous axiom on Wall St. that says you should sell in May and go away for the summer. Up until the 21st century, the months between May and October were typically the worst performing of the year for stocks. Part of that notion comes from the fact that old Wall St. traders would take the summer off at their homes on the shore or upstate.
As we know, the world is very different now, and our markets are traded by people and robots all over the world. No one really takes a day off, especially when there is an economic crisis underfoot. Stay vigilant. Stay focused. Stay healthy.
See you next month.
chart courtesy LPL Financial 
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(chart courtesy YCHARTS)  Shares of Abiomed are up by over 12% following the medical implants manufacturer beating its fourth-quarter earnings estimates. ServiceNow's stock price rose by 9.5% after the software company's Q1 earnings report revealed better-than-expected results, in addition to barely needing to trim its guidance for 2020.  Shares of Tapestry are down by over 12.5% following the luxury fashion holding company's third-quarter earnings falling short of expectations. Similarly, Textron's stock price dropped 12% due to the industrial conglomerate's Q1 results missing estimates. Word of the Day Personal income refers to all income collectively received by all individuals or households in a country. Personal income includes compensation from a number of sources, including salaries, wages, and bonuses received from employment or self-employment, dividends and distributions received from investments, rental receipts from real estate investments, and profit sharing from businesses.  Today in History April 30th, 1803: President Thomas Jefferson signs the Louisiana Purchase, paying Napoleon Bonaparte $15 million for 828,000 square miles of territory, which stretches from the Mississippi River to the Rockies and from the Gulf of Mexico to the Canadian border. In the stroke of a pen, the United States nearly doubles in size, and a huge frontier of opportunity opens for its citizens. The U.S. finances the deal by borrowing $11.25 million in 6% bonds from European investors.
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