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The bull run in tech and Chinese equities rolls on even as coronavirus cases spike

July 9, 2020, 9:05 AM UTC

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Good morning, Bull Sheeters. The rally in Chinese equities continues today, and investor enthusiasm is proving infectious. Europe opened in the green, and U.S. futures (well, the Nasdaq, anyhow) are off their lows.

That’s despite yet another grim COVID milestone: 12 million cases around the world, with more than one-quarter of those in the United States.

Let’s see where investors are putting their money.

Markets update


  • The major Asia indexes are all in positive territory in afternoon trade. Shanghai leads the way, looking to extend the rally to eight straight days.
  • There are new coronavirus flare-ups in Hong Kong and Tokyo. The Japanese capital reported 224 new cases, a new high. So far, stocks haven’t moved on the news.
  • Alphabet’s Google appears set to shut down a cloud-computing service in China as the geopolitical tensions in this major market are forcing tech companies to make hard decisions. Not to fear. Google picked up a big cloud deal with France’s Renault.


  • The European bourses all ticked higher at the open. The benchmark Stoxx Europe 600 was up 0.4% in early trading.
  • Angela Merkel traveled to Brussels yesterday to urge member nations to back a €750 billion coronavirus bailout package. The big summit on that divisive package comes late next week.
  • Back to the office! That’s the message from the U.K.’s tax man as the country faces a crippling shortfall in income tax revenue brought on, primarily, by so many well-paid finance workers doing their jobs abroad following lockdown measures.


  • The major averages rebounded on Wednesday with Apple and the Nasdaq hitting fresh all-time highs again.
  • But the so-called reopening trade is closing fast as the U.S. tops 3 million coronavirus cases, including a record 60,000 cases on Tuesday. The number of sick and dying may mean nothing to Nasdaq bulls, but the escalating cases are enough to alarm Cleveland Fed president Loretta Mester.
  • Speaking of the reopening trade… shares of airlines, hotels, casinos and restaurants have had a rough month. On cue, [holink]United Airlines[/hotlink] says it may need to furlough 36,000 workers at the end of September.


  • Gold is up, trading well north of $1,800 an ounce.
  • The dollar is flat.
  • Crude is trading sideways with Brent above $43/barrel.


The rich list

The rich are getting richer. That’s the big take-away from Capgemini’s World Wealth Report 2020, published this morning. The net worth of wealthy individuals topped $74 trillion last year, up 8.7% from 2018. To put that in perspective, the U.S. GDP, in nominal terms, hit $21.7 trillion last year. Peanuts.

What I found intriguing about the report is where the wealthy are putting their money. They are long stocks—or at least they were as of February. As the calendar flipped into the new year, equities regained the top spot as the preferred asset allocation for HNWIs (high net worth indviduals).

Source: Capgemini

According to Capgemini, HNWIs in North America are most bullish on stocks with 39% of their portfolio weighted to equities. It’s becoming a global trend. The Japanese in recent years have shifted out of cash and into equities as well. The recent run on the Nikkei may reflect this thinking.

There are some doubts, however, about what the 2021 report will show next year. Stock market volatility, as we’re living through, typically forces HNWIs to rethink their portfolios to emphasize less-risky assets. Capgemini saw this in 2017, a down year.

One last thing to point out from the report… The wealthy are growing increasingly frustrated with fees. This is potentially bad news for the wealth-management industry. About one-third of wealthy clients registered their discontent with the fees they’re paying wealth advisors. That number could rise further if the markets get any more turbulent in the second half.


Have a nice day, everyone. I’ll see you here tomorrow.

Bernhard Warner

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Today's reads

The Prime killer. Analysts are hot on Walmart as the retailer appears set to announce an annual subscription plan to take on Amazon Prime. It would be priced a bit cheaper and would include discount gas fill-ups. Walmart is up nearly 1% in pre-market trading this morning.

The S&P bull run, explained. What's fueling the benchmark S&P 500's incredible bull run? It's up 42% since its March lows. Fortune's Anne Sraders hits up her Wall Street sources and gives us five reasons. Hint: it's not a Biden bounce.

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Market candy

8th place

The personal wealth of stock picker extraordinaire Warren Buffett is estimated at a cool $68.6 billion. Not bad for you or me. But he's now slipped to eighth-place on the Bloomberg Billionaires Index. He's looking up at a lot of tech titans.