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Most data comes with too large a lag to add much value. Therefore, much emphasis has shifted to higher-frequency drivers, especially related to data around mobility and connections with the pre-COVID world. Economists at TD Securities have mapped the G20 Google mobility factor and conclude the S&P 500 should be trading at 3,220. 

Key quotes

“The mobility data has tried to map the bridge between the new and the old worlds, offering a faster cross-check on the return to normalcy. We mapped the five sub-indicators of the G20’s Google mobility dataset and deconstructed it into a few factors. When overlayed against the USD, the SPX, and the VIX, it shows that these barometers of risk have outpaced the mobility data.”

“The S&P 500 holds a 10% premium, which is the highest we’ve seen so far, while the VIX runs about 5 points cheap. In other words, the S&P 500 should be trading around 3,220, and the VIX should be above 30. That’s not to say that these moves will happen, though these gaps lower the bar for a correction.” 

“There’s also a handful of fall risk events that serve as possible catalysts. There are the narrowing US election polls, key central bank meetings, a return to school and potential COVID impacts, and seasonal market trends in no particular order. Historically, the latter shows that September offers poor risk-adjusted S&P 500 performance.”

 

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