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Home / Business / Apple and Amazon dominate the economy “without mouths or noses”, but 10% of jobs may never return, says the strategist.

Apple and Amazon dominate the economy “without mouths or noses”, but 10% of jobs may never return, says the strategist.



For the American technology giants, it was quite a performance.

Google GOOG Parent Alphabet,
+ 0.62%
exceeded revenue and revenue expectations, even though the search giant’s year-over-year revenue declined.

The benefit of all four is that their products and services can be used from home, more and more often, in the absence of real shopping and leisure.

According to Dhaval Joshi, BCA Research’s chief European investment strategist, it is also an economy without “mouths or noses”. This means that physical distancing and the increasingly mandatory requirements for wearing masks limit any activity that requires the use of your mouth and nose close to others.

In the US, hospitality, retail and transportation account for 1

2% of economic activity. Suppose that physical distancing and the use of face masks force them to work at a capacity of two-thirds, then the economy will lose an acceptable 4% activity. However, these labor-intensive sectors employ 25% of all workers – so with a capacity of two thirds, more than 8% of all jobs are excluded or 10% in a less favorable scenario.

As governments tire of providing life cycles for employers, persistent unemployment will continue to rise, which should continue to reduce 30-year bond yields, Joshi said. Due to the close relationship between bond yields and bank share prices, bank shares should decline.

The winners, he notes, are not Europeans, so American profits have held up better. Amazon, Apple, Microsoft MSFT,
-0.07%
and Netflix NFLX,
+ 0.27%
in itself represents more than half of the underperformance of the Stoxx Europe 600 SXXP,
+ 0.48%
vs. S&P 500 SPX,
-0.37%
this year.

Joshi rejects the argument that Robinhood Day traders are creating a speculative frenzy in growth defenses. According to the latest price movements, it is possible to explain the resilient gains and yields from bond collapses.

Although there is always the possibility of a sudden end to a pandemic, he does not expect to be available on the basis of a credible vaccine until next year. “This suppresses the ultra-thin TMUBMUSD30Y binding,
1.195%
it brings even more returns and continues to support being overweight on growth deficits, at least compared to other parts of the stock market, ”he says.

sounds

On Thursday night, in addition to technology revenues, well-received revenues from carmaker Ford F were included,
-2.60%
and creator of Electronic Arts EA video games,
+ 1.95%.
while Expedia EXPE travel service,
-0.45%
disappointment after a worse-than-expected loss.

White House chief Mark Meadows said the Trump administration would support a weekly extension of another $ 600 a week in unemployment, which expires on Friday.

France, Italy and Spain reported double-digit declines in gross domestic product in the second quarter. The U.S. economic calendar includes information on personal income, the labor cost index, the Chicago Purchasing Managers Index, and the University of Michigan Consumer Sentiment Index.

The market

Futures Nasdaq-100 NQ00,
+ 1.16%
increased after the results of banner technology, while the S&P 500 ES00,
+ 0.28%
futures a little higher.

Gold GC00,
+ 2.77%
and silver SI00,
+ 4.67%
futures gathered on Friday.

GBPUSP,
+ 0.44%
traded above $ 1.31 and increased more than 5% in the last month.

chart

The still portfolio, which represents the even weighting of stocks, bonds, gold and cash, has had its best run in 40 years, points out Michael Batnick, director of research at Ritholtz Wealth Management and author of the blog Irrelevant Investor. Although this portfolio does not appreciate equities in the long run, it is also more stable and its monthly drawdown in the last bear market is only 5% and in the global financial crisis 2008-2009 less than 15%. “With bonds giving you 1-2% and money giving you 0, I wouldn’t expect much positive results from here. The good news is that if history is a guide, you shouldn’t expect a single disadvantage, “says Batnick.

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