Data Confirm Economic Recovery, with Caveats

Stocks were largely flat at midday on Friday, with gains in the Financial and Technology sectors and losses in Healthcare and Real Estate. The University of Michigan said that its consumer sentiment index for the first half of June rose to 86.4, up from a final reading of 82.9 in May and above the Reuters consensus forecast of 84.0. The Dow fell 0.2%, the S&P fell 0.1%, and the Nasdaq was flat. Crude oil traded near $71 per barrel, while gold fell $15 to $1882 per ounce.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

This pick list highlights constituents of the Morningstar US Mid Cap Index that we believe offer investors the best risk-adjusted return prospects. The market capitalization range for U.S. mid-caps typically falls between $1 billion and $8 billion and represents 20% of the total capitalization of the U.S. equity market.

In the early months of 2021, we detailed overall insider sentiment that was more bearish than we like to see, but not so bearish that we were calling for a meaningful correction. The bearishness was broad-based, but led by cautionary trading from insiders at companies that list on the Nasdaq (often technology firms).

For the month of May, the S&P 500 managed to eke out a 0.6% gain; the Nasdaq made a nice comeback, cutting its loss to 1.5%; the Nasdaq 100 (QQQ) dropped 1.2%; the S&P 400 rose 0.2%; and the Russell 2000 (IWM) rose 0.3%. Once again, action was seen in all 11 S&P sectors as well as in individual names.

The stock market moved higher last week, with technology stocks outperforming blue chips. During Friday's session, the Dow Jones Industrial Average increased 65 points, or 0.19%. The S&P 500 was up 0.08%, and the Nasdaq Composite was up 0.09%. For the week, the DJIA was up 322 points, or 0.94%, the S&P 500 was up 1.16%, and the Nasdaq Composite was up 2.06%. Year-to-date, the DJIA is up 12.82%, the S&P 500 is up 11.93%, and the Nasdaq Composite is up 6.68%.

The approximately $1.7 trillion cryptocurrency market (Bitcoin, Etherium, Dogecoin, etc.) has been tumbling from a $2 trillion-plus level on a flurry of negative developments. These include Tesla's Elon Musk halting acceptance of Bitcoin for Tesla products due to environmental concerns; China saying it would not allow financial institutions to provide services related to crypto transactions; and Colonial Pipeline paying Bitcoin as ransom to hackers, furthering the notion that cryptocurrencies are ideal for enterprises seeking to evade laws. Prior to the headlines, cryptocurrencies were on a tear despite no clear path to widespread adoption by consumers or businesses, and amid uncertainty over regulation. We estimate that the global equity market capitalization is approximately $90 trillion. Gold is about $10 trillion. For crypto to make it on the radar for most investment managers' asset-allocation models, we expect it needs to at least triple in value, to approximately $5 trillion. By then, maybe there will be more uses for and regulations to define the asset, and more fundamentals to support valuation; this has worked for gold over the years. For the broader market, collapsing crypto prices also signal excessive liquidity in the system, and worries could spill over into other asset classes. Essentially, markets are in risk-off mode when Bitcoin tanks.