“Businesses Inch Open Just In Time For Summer”-Weekly Market Update June 12, 2020
“Businesses Inch Open Just In Time For Summer”
It’s starting to feel like we may actually get a (somewhat) normal summer after all. Industries are starting to open back up and continue at relatively normal operating levels. Your favorite local restaurant is probably open but requires that you wear a mask when not seated. Most beaches are back open. Hollywood has announced that they’ll be restarting movie production. AMC plans to open at some point in July. Disneyland wants to open by July 17th.
Let’s take a look at some of the bigger business updates from the past week.
2.5 Million Jobs Added In May
Finally, this market update gets to start out with some positive economic news. The May jobs report came out this week and was shockingly surprising. Instead of unemployment increasing as expected, it actually fell during May as 2.5 million jobs were added to the economy (the largest monthly job gain on record).
Americans’ personal incomes also reportedly jumped 10.5% in April, mainly due to the coronavirus stimulus and an additional $600 added to unemployment benefits.
NASDAQ Gets Back In The Green
The NASDAQ was the first major index to get back into the green for the entire year this week. Since it bottomed out in late March, it has come roaring back by about 46%. 46% in about 3 months is roughly 15% each month (remember that the annual historical average for the stock market is 7-8% per year. The NASDAQ has been doing about double that each month for the past three months.
So what does that mean? Well, it could mean a few things...
● Markets could have overreacted initially to the threat of coronavirus and now that the virus is passing markets are just returning to normal levels.
● It could be a sign that investors are getting too euphoric in their excitement for business to return. They’re acting like everything is fine when, in reality, coronavirus still poses a significant threat. More gains lead to FOMO by other investors who instantly start to buy which leads to more gains.
● It could just be a short-term rally that will offset the monumental loss earlier in the year. By the end of the year (despite the volatility both ways) the annual average could be right around 8% just like any other year.
If you invest your own money we’d recommend just keeping an open mind and making informed decisions!
TikTok Challenges YouTube
YouTube is the world’s second-biggest search engine (after Google) but an interesting trend is taking place. Younger generations are trending towards the up and coming TikTok for their videos instead of YouTube. Here are some of the stats that Qustodio found:
● YouTube still has the advantage in terms of total minutes watched per day (these stats were for kids 4-15 in Spain, the UK, and the US). Kids watch about 85 minutes of YouTube per day vs 80 minutes worth of TikTok videos.
● Both platforms saw a significant jump in action during the quarantine. No classes and plenty of free time means more videos.
● TikTok is gaining on YouTube in terms of engagement.
The interesting part is the shift in attention spans between generations.
● Millennials (24-39): Grew up watching shows on Nickelodeon, Cartoon Network, or Disney TV. Episodes are 20 minutes long.
● 1st Wave Gen Z (16-23): Grew up watching more YouTube videos which are around 12 minutes long, on average.
● 2nd Wave Gen Z (1-15) - Growing up with short-form mobile content embodied by TikTok, whose videos are just 16 seconds long on average.
IBM Drops Facial Recognition
Facial recognition software (like that kind that can identify your friends when you upload a Facebook photo even when you don’t tag them) is a highly controversial technology. In China, the software is used in about 170 million cameras to identify and keep tabs on all citizens. Considering the implications of what the technology could be used for, companies are starting to veer away from it.
● IBM announced that they won’t be producing the technology anymore as it could be used for mass surveillance, racial profiling, or violating basic human rights.
That’s it for this week -- Join us next week for another market update.
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This material is not intended as an offer or solicitation for the purchase or sale of a security or an other financial instrument. Past performance does not guarantee future performance.
All the views expressed are those of Chris Simpson and not those of Sierra Ridge Wealth Management or NEXT Financial Group Inc. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.