Thread by @TheStalwart

THREE SIMPLE REASONS WE'VE SEEN SUCH A FEROCIOUS STOCK MARKET RALLY

There's been a lot of Galaxy Brain takes about why stocks have rallied so hard. But in today's @markets newsletter, I argued that it's all pretty straightforward bloomberg.com/news/newslette…

@markets The first reason is simply that economic activity is just way better than it was at the end of March by numerous measures.

Here's the number of people flying (via @conorsen)

@markets @conorsen Here's dining out activity in the early open states.

@markets @conorsen Here's used car prices, which are now back to where they were expected to be even without the crisis bloomberg.com/news/articles/…

@markets @conorsen Here's mortgage applications bloomberg.com/opinion/articl…

@markets @conorsen Here's consumer spending, as measured by Chase cardholders.

You get the point, the list goes on and on.

@markets @conorsen Not only has activity rebounded substantially, but it's clearly done so at a pace that's taken economists by surprise. It wasn't expected to be as soon as it's happening. You can see this in the record high for the Citi Economic Surprise Index

@markets @conorsen So we have a substantial rebound in *real* economic activity as measured by dozens of charts that started sooner than people are expected.

And then finally, investors have just been insanely negative on this rally.

@markets Ad today we got the BofA fund manager survey which still shows that investors have never found the market to be this overvalued. The pessimism among the investor class remains enormous.

So add it all together

-Significant improvement in the real economy

+

-Sooner than expected

+

-Extreme investor pessimism

And you get a vicious market rally that hasn't hardly given anyone a chance to catch up or get in.

Anyway! Sign up for the newsletter here. link.mail.bloombergbusiness.com/join/4wm/marke…

Today's retail sales news just confirms every point that I made above.

https://twitter.com/calculatedrisk/status/1272870987843817472

I continue to think that if the recovery stalls out that the market will stall out. And that the risks to the economic recovery are extremely high.

Today's update of this chart is out. Looks like the economy is still getting better! markets.jpmorgan.com/research/open/…