A postponement of economic knowledge is not as bad for the stock market as some investors think, according to a Wednesday memo by Tom Lee of Fundstrat.
Indeed, according to Lee, there are two main implications of a weakening of the economy that can simply help money markets.
But first, the data.
U. S. retail sales But it’s not the first time They increased by 0. 3% in October, according to consensus estimates of 0. 5%, and although October accounted for six consecutive months of continued expansion of retail sales, it also marked a significant slowdown in retail sales expansion of 1. 6% in September.
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Knowledge of JPMorgan’s customer spending for credit card users shows a slowdown trend during the month and a half, as increased caution from the virus leads to a decrease in activity levels, Lee said.
Why is this weakening of economic knowledge bad for equities?
In addition, progress in vaccine progression and remedies for COVID-19 is accelerating, which is “probably much more than short-term economic data,” Lee said.
But the two main reasons why weakening economic knowledge can have a positive effect on the stock market is that it puts more pressure on Congress to adopt a broader fiscal stimulus package and also helps keep the Fed on the corner. simple financial policy.
“So you can see, ironically, the postponement of economic knowledge has implications for money markets,” Lee said.
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