It was a rough week with S&P 500 down 0.3% and with the carnage in the mega-caps. There’s a growing chorus the S&P 500 is significantly distorted by the outsized market cap of the Big 5 tech names (AAPL, MSFT, AMZN, FB, GOOG), now a 22% weight in the index. I don’t see the bubble. The top 5 are 18% of earnings and >80% of 2020 EPS growth. So, that 22% market cap share does not seem so out of line with their nearly 20% net income share. After all, aren’t these franchise companies? (More below.)

It looks like this is the week that saw US case surge finally plateau (and hopefully turn into a decline this weekend). And the White House is now endorsing mask use. Thus, we see the economy risks diminishing. And as I have noted in the past, as the national disease panic fades, local behavior recovers.

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This is why I am not too shocked at seeing economic data stall in the past week. Virus spread reaccelerated in early June and the media and skeptics and policymakers have been quite alarmed — appropriately. But this dampened economic momentum. If cases are peaking, economic momentum will resume. Our policy strategist, Tom Block, expects a stimulus package passed and signed by early August.

The set up for stocks, in our view, is attractive right now, with the...

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