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Home / Business / Apple and Amazon dominate economy “without mouth or nose” but 10% of jobs can never come back, strategically says

Apple and Amazon dominate economy “without mouth or nose” but 10% of jobs can never come back, strategically says



This was a pretty performance for the tech giants of America.

Google GO Parent Alphabet,
+ 0.62%
exceeded earnings and revenue expectations, although the search giant’s revenue from year to year declined.

What both benefit from is that their products and services can be used from home, and increasingly in the absence of real-world competition and entertainment competition.

This is also an economy without “mouth or nose”, according to Dhaval Joshi, a leading European investment strategist at BCA Research. That is, physical distance and the increasingly mandatory requirements for wearing masks restrict any activity that requires the use of your mouth and nose in the vicinity of others.

In the United States, hospitality, retail and transportation account for 1

2% of economic activity, he notes. Assume that physical distance and the use of face masks force them to operate at two-thirds of capacity, then the economy loses a tolerable 4% of activity. However, those labor-intensive sectors employ 25% of all workers – so with a two-thirds capacity, more than 8% of jobs are lost, or 10% in a less favorable scenario.

With governments tired of providing lifelines to employers, permanent unemployment will continue to rise, which should keep the 30-year bond yield, Joshi states. Due to the close relationship between bond yields and bank share prices, bank stocks should decline.

The winners, he points out, are not European, which is why U.S. profits have held up better. Amazon, Apple, Microsoft MSFT,
-0.07%
and Netflix NFLX,
+ 0.27%
alone accounts for more than half of the low performance of Stoxx Europe 600 SXXP,
+ 0.63%
vs the S&P 500 SPX,
-0.37%
this year.

Joshi dismisses the argument that Robinhood day traders are creating a speculative frenzy in growth defenses, saying the recent price move can be explained by both resilient profits and bond yields.

While there is always the possibility of a sudden end to the pandemic, he is not expecting that, due to belief, a credible vaccine will not be available until next year. “This will suppress the ultralong bond TMUBMUSD30Y,
1,192%
it pays even more, and continues to support an overburdening of growth defenses, at least relative to other parts of the stock market, ”he says.

The buzz

In addition to the technology gains, Thursday evening also included a well-received profit from carmaker Ford F,
-2.60%
and video game producer Electronic Arts EA,
+ 1.95%,
during the Expedia EXPE travel service,
-0.45%
disappointed after a worse-than-expected loss.

White House chief of staff Mark Meadows said the Trump administration will support an extra $ 600-a-week extension for unemployment benefits, which is expected to expire on Friday.

France, Italy and Spain reported a double-digit decline in second-quarter gross domestic product. The U.S. economy calendar has personal income releases, an employment cost index, a Chicago purchasing managers index and a University of Michigan consumer sentiment index. .

The market

Nasdaq-100 NQ00 Futures,
+ 1.14%
increased following the results of banner technology, while S&P 500 ES00,
+ 0.26%
futures that ended higher.

Gold GC00,
+ 2.70%
and SI00 silver,
+ 4.37%
the futures were both rowing on Friday.

The GBPUSD pound,
+ 0.45%
has been trading above $ 1.31 and advancing above 5% in the last month.

The map

The permanent portfolio, which is an equal weight of stocks, bonds, gold, and cash, has just had its best run in 40 years, remarks Michael Batnick, director of research in Wealth Management Ritholtz and author of the blog Irrelevant Investment. While this portfolio modernizes long-term stocks, it is also more stable, suffering a 5% monthly decline in the most recent bear market, and less than 15% in the global financial crisis. -2008-09. “With bonds giving you 1-2% and money giving you 0, I don’t expect anything upside down from here. The good news is that, if history is any guide, you shouldn’t expect too many disadvantages , “says Batnick.

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