Cathie Wood's PROPHECY: the Markets Will Recover Fastly

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01. and as you know when we've been thinking about the coronavirus we've been using an analogy the shock to the system with October of 87 and 9/11 being the two comparisons that made sense certainly to me having been through them both while being in the market and today's employment report corroborates that I think everyone was pretty shocked this morning to see non-farm payroll employment up for the month of May now just to give you a sense of the drama last month so April 4 April employment dropped twenty point seven million by twenty point seven million people and then the expectation was May would be another serious decline perhaps not as serious so the consensus expectation was seven point five seven point five million jobs lost in the month of May instead what happened is the economy created created 2.5 million jobs so the consensus estimate was off by roughly ten million jobs that's how quickly this economy is turning around and it makes sense we know that the coasts were harder hit and we know that other states were basically saying come here we're open to do business certainly in the month of May and some of that may have happened the unemployment rate which last month was fourteen point seven percent and which most economists expected to go to twenty percent in fact the estimate for May was nineteen percent instead of going up it dropped from fourteen point seven percent to 13.3% nothing to brag about but the trajectory is in the right direct now and the hours work numbers were phenomenal the average weekly hours worked I increased in just one month by it was well in the manufacturing sector 2.1 percent that's the manufacturing hours worked and the average weekly hours worked for the entire economy went up 1% many people don't know this but that number actually moves the needle more often than the employment numbers themselves that work week is a very powerful number and I've rarely seen it go up by one percent over one month that's annualizing at roughly 12% rate so this was a pretty surprising report the average hourly earnings I know were up actually they declined they declined and it's a mix so this is the opposite of what happened during the crisis so those jobs lost tended to be the lower wage jobs so last month the average hourly earnings month-to-month again were up 4.7% a clue that that a lot of us were working from our homes this month or the for the month of May they the average hourly earnings dropped one percent year-over-year they're up 6.7% still which is roughly double where we were before the coronavirus and the average weekly earnings were up on a year-over-year basis seven point seven percent so last week we talked about the saving rate up at 33 percent for April and that was pretty shocking I still think it could go up again slightly for the month of May but if it doesn't it's because the economy really is kicking up in it kicking in in a big way and and we're on our way what I'd like to talk about now is what we're seeing in the markets from a signalling point of view and and this is partly because fiscal and monetary policy are highly stimulative and today we just saw that President Trump reiterated his desire to cut payroll taxes my guess is that is for this year to get people back to work much faster so hopefully that does happen the confluence of this information is that the the market the stock market is smelling a big cyclical recovery we've talked about the value sectors really lagging behind the rest of the market and the value sectors primarily energy financial services materials and industrials they had been lagging badly and in the last week 10 days they have started to catch up pretty significantly now and and and those those four categories were the best performers just an even month to date for June those are the four best categories healthcare consumer staples consumer services and tech are the the weakest categories and of course they have been the strongest now how do we feel about this we are very much more focused on growth than anything else future growth and in fact exponential growth but we feel it's very important for cyclical sectors to start participating in the bull market if for no other reason than cyclical cyclical reasons and the reason for that is this means that the bull market is broadening out it's becoming stronger we had a similar experience in the fourth quarter of 2016 in the fourth quarter right after the election with the promises of tax cuts and so forth the stock market took off against expectations and value the value space was the strongest part of the market for that quarter the market was up value was the strongest was was even stronger and actually growth most of the growth sectors had a negative quarter and I remember saying when we had to explain ourselves back then that we actually thought this was a good thing from a bull market perspective and we believe that that it would be a launching pad at some point for the next leg of the outperformance of the kinds of stocks that Ark focuses on so today is an exciting day because the market the bull market has broadened out I do think one reason is options expiration so I think that turbocharged things a bit so with the good economic news and and and a broadening bull market I'm in a good mood and this is certainly a much better mood than about a week ago in general and I'm looking forward to the rebuilding of our economy and relationships