| Tuesday, August 04, 2020 Headlines 1. US markets rally into the close, erasing earlier losses 2. Disney reports mixed earnings as streaming services grow 3. US GDP and the S&P 500 show dramatic divergence 4. Apple dominates the indexes with $1.87 trillion market cap 5. Investors aren't buying and holding like they used to Markets Closed
 Photo courtesy GettyImages/Orla
Markets Today U.S. markets erased early losses and rallied into the close as some of the biggest stocks posted gains that carried the indexes with them. Just like last month, stocks rallied alongside gold, which topped $2,000 per ounce for the first time ever.
The next U.S. stimulus bill continues to be debated in Washington with no clear end-date or resolution in sight. Bankruptcies, evictions, and debt are on the rise, and unlike the government, normal people just can't print money to push off their debts.
Still, the U.S. stock market continues to plod higher. With interest rates near zero and government bond yields down with them, the big money is sticking with stocks. That said, last month was one for the history books as almost every tradable security, commodity, currency, and global equity index was higher. The only notable decliner was the U.S. dollar, which helps push commodities and some stocks higher.
These are odd times, indeed.  Chart courtesy AllStarCharts.com
Headlines:
 Chart courtesy Schwab
Total Divergence In our latest installment of how the stock market and the economy have totally diverged, we present the chart above. It shows the quarterly drop in U.S. gross domestic product against the rise in the S&P 500's market cap. Q2 GDP fell by nearly $2 trillion last quarter, while the S&P 500 gained just under $4 trillion as the stock market roared back.
Most of the market cap growth has been concentrated in a handful of big technology companies, as we know. Apple, which is both a tech company and a retailer, was among the biggest beneficiaries of that rise. It is one of the most widely held stocks in mutual funds, ETFs, index funds, hedge funds, pension funds, and among retail investors. It's the largest public company in the world, and it accounts for a full 6.5% of the S&P 500's market capitalization.  chart courtesy Goldman Sachs
Echoes of Big Blue Not since the heyday of "Big Blue," aka IBM, in the late 1980's, have we seen one stock dominate the index the way Apple does today. The problem with that much concentration is that as goes Apple, so goes the market. Not just the S&P 500, which is market-weighted. The DJIA, which is price-weighted, is also influenced by Apple's daily movements, as are all of the funds, ETFs, and indexed portfolios that count it among its top holdings.
Apple has delivered handsomely for investors for years, without question. Its growth rate, however, will be difficult to sustain. As Oprah Winfrey famously said when she spoke at the launch of Apple's media platform, "They're in a billion pockets, y'all."
Here are the other heavyweights dominating the S&P 500 with their market caps:  Chart courtesy YCharts  Chart courtesy NYSE/Reuters
Short Timers Not only are the amount of publicly traded stocks shrinking, the amount of time investors are holding onto them has also dwindled, according to Reuters. Gone are the days of buy and hold investing for the long term. The average holding period for U.S. shares was 5.5 months in June. That's the shortest duration since just after the Great Financial Crisis in 2010. Just eight months ago, the average holding period period was 8.5 months.
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(chart courtesy YCHARTS)  Shares of Mosaic are up by 14% following the fertilizer production company's Q2 profits beating analyst estimates. Advanced Micro Devices' stock price rose by over 9% after the semiconductor company announced that its AMD Radeon pro-5000 series GPUs will be available for the 27-inch iMac.  Shares of Evergy are down by over 11% amid a leak that the electric utilities company will announce Wednesday that it's no longer planning to sell itself. AIG's stock price fell by nearly 7.5% after the multinational finance and insurance corporation reported Q2 earnings and revenue results that failed to meet analyst expectations. Word of the Day Key money is a fee paid to a manager, a landlord, or even a current tenant to secure a lease on a residential rental property. The term is sometimes used to refer to a security deposit. However, in some competitive rental markets, key money is simply a gratuity or a bribe.
 Image courtesy allthingshamilton.com
Today in History August 4, 1790: Congress enacted Alexander Hamilton's plan to fund the public debt, ending years of turmoil and haggling over the junk bonds issued by the federal and state governments during the Revolution, making government spending possible, and giving birth to the American securities markets.
William G. Anderson, The Price of Liberty: The Public Debt of the American Revolution
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Tuesday, August 4, 2020
Heavyweights
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