| Friday, September 11, 2020 Headlines 1. US markets end mixed as Nasdaq has worst week since March 2. Profits and prices at extreme divergence 3. Equity outflows on pace for seven-year high 4. Your favorite sectors and stocks 5. What to expect next week Markets Closed
Year-to-Date
 Image courtesy GettyImages/Ascent Xmedia
Markets Today A choppy week for investors finally came to an end as U.S. markets closed on a mixed note. Tech stocks tried to drag all the indexes lower, and the Nasdaq closed down 0.6%, ending its worst week since March. Facebook (FB), Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL) all fell 5% or more this week, depriving the broader market of the leadership it has followed for months.
Big investors have been pulling money out of equities for the past several months, even as markets have charged higher. They are uncomfortable with lofty valuations in an uncertain economic environment. You, however, are more comfortable with that, as our recent survey shows. You've been right so far, but you will be challenged in the next few weeks and months, as volatility looks like it is here to stay.
Here's what the last two weeks have looked like for major U.S. markets and a few international ones. Japan looks like a sea of calm compared to the rest.  Chart courtesy YCharts PODCAST ALERT! The Investopedia Express On next week's podcast:
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Headlines:
 Chart courtesy OxfordEconomics Profitless Momentum In semi-normal times, equity prices are based off of investors' anticipation of the future profitability of the underlying companies. The price-to-earnings ratio spells that out pretty clearly for us, and it has been a relatively reliable metric for valuing companies—except during market manias and crashes.
2020 has seen both extremes, and as markets rushed to record highs over the last few months, the price of the market and many of the most popular stocks got way ahead of their earnings and hopes for future earnings. That happens.
But the extreme divergence between actual corporate profits and the market have gone to a level that has made many investors uncomfortable. Big institutional money has been moving money out of equities for over three months, even as the stock market has made record highs. As we know, big stocks carried the market higher, and it only takes a few of the trillion dollar companies to lift all boats. But investors' confidence has been wavering all summer, with consistent outflows for 12 straight weeks. That is the longest streak of outflows since 2013.  Chart courtesy Bloomberg/ICI You Are Defying the Trend You, our fearless readers, are not heavy sellers, according to our recent survey. Some of our older readers have been paring back on their winners and taking some cash off the table, but our Gen-X and millennial readers are far more bullish, and some are even adding to their positions.  Your Favorite Sectors and Stocks By and large, most of you who responded to the survey continue to lean into technology and Internet communications stocks. That's where the returns have been up until a couple of weeks ago. You think it will stay that way, and you've been adding positions in healthcare.  A Few of Your Favorite Stocks You like winners, and many of you are loyal to stocks you have held for a very long time. These are your top ten picks, and if you've been long-term investors, you have done very well holding them.  What to Expect Next Week After a very choppy week that produced the worst five-day stretch for the Nasdaq since March, investors should brace for more volatility. There is a Fed meeting in the middle of the week—the last before the elections in November and quadruple witching on Friday. That always brings Halloween a little early.
Here's how some of the major asset classes have performed year-to-date:  Events This Week
Tuesday, Sept. 15:
Wednesday, Sept. 16:
Thursday, Sept. 17:
Friday, Sept. 18:
Central Banks Roundup As much of the world worries about a "second wave" of COVID-19 infections slowing the economic recovery, we'll hear what three of the largest central banks are thinking this week. On Wednesday, both the U.S. Federal Reserve and the Bank of Japan announce interest rates, and the Fed also gives its press conference. On Thursday, the Bank of Japan gives its press conference while the Bank of England gives its own interest rate decision and press conference. Significant current events are facing all nations.
This is the last scheduled Federal Open Market Committee (FOMC) meeting before the U.S. presidential election on Nov. 3, the next one is scheduled to take place just after the election, so this will be the last time the Fed will be expect to weigh in on the economy before Americans go to the polls.
In the U.K., this is the last Bank of England Monetary Policy Committee meeting before the Oct. 15 EU summit, which U.K. Prime Minister Boris Johnson says the U.K.-EU trade deal must be done by if the U.K. and EU will have their new relationship worked out by the end of the transition period on Dec. 31, 2020.
For Japan, this comes right as long-serving Japanese Prime Minister Shinzo Abe stepped down due to health reasons, and his party, the Liberal Democratic Party, will be choosing a new party leader, with the Japanese parliament voting on a new prime minister on the same day the central bank announces its new monetary policy.
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(charts courtesy YCharts)  Shares of LyondellBasell Industries are up by over 4.5% after a JPMorgan analyst upgraded the chemical company from Neutral to Overweight. FedEx's stock price rose by nearly 4% ahead of the delivery services company reporting Q1 earnings next week.  Shares of NortonLifeLock are down by 5.5% after the cybersecurity software company posted a 172.73% decrease in earnings from Q4. Kimco Realty's stock price fell by 4% amid the real estate investment trust earning a consensus rating of Hold from nineteen analysts. Word of the Day Fund FlowsFund flows measures the net of all cash inflows and outflows in and out of various financial assets. Fund flow is usually measured on a monthly or quarterly basis; the performance of an asset or fund is not taken into account, only share redemptions, or outflows, and share purchases, or inflows. Net inflows create excess cash for managers to invest, which theoretically creates demand for securities such as stocks and bonds.  Photo credit : 911Memorial.org
Today in History Sept. 11, 2001: We will never forget.
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Friday, September 11, 2020
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