Last week’s SPX 5% gain while mass protests have taken place across >350 communities seems incongruous. I understand anyone who thinks the equity market is somehow ignoring massive social unrest. These protests are the most widespread—resonating with the public so strongly—that one has to go back 50 years to find a similar time in history – 1968.

But the fact is the equity market is not a moral compass. We did get incremental economic news that was “half-full,” especially on the cyclical components of the economy. American Airlines (AAL) increasing capacity this week is highlighting perhaps that Americans may be moving more quickly to a pre-COVID normal than we expect. The “epicenter” stocks surged >10% in the past 4 days… that is the real story.

For example, airlines posted 4 days of spectacular gains and were up 13% on Thursday, while casinos surged 13% in past two days. Remember the “hopeless” energy sector? It’s up 8% in the past few days. Wow. The huge amounts of “dry powder” seem to be finding their way into cyclical stocks. This is the reason we think the “fresh money” strategy needs to be “less barbell” and pretty much outright buy the epicenter.

We asked our macro team to identify “early in the barbell recovery” sto...

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