New cases of the coronavirus were reported in China this week, with the mainland reporting 105 new cases on Thursday and 123 new cases on Friday. Hong Kong’s chief executive Carrie Lam announced yesterday that fall elections originally scheduled for September 6th would be postponed as the third wave is resulting in record new daily case figures. United Kingdom’s Prime Minister Boris Johnson ordered an extension of the partial lockdown throughout northern Great Britain for at least two weeks as Europe continues to see rising daily cases. The remainder of the MLB season has been called into question after nearly 20 Miami Marlins players and staff, at least two Phillies staff, and a number of Cardinals players tested positive for coronavirus, resulting in numerous cancelations.
As the enhanced unemployment benefits are set to expire today, pressure is mounting in Washington for an agreement on a new stimulus bill to replace American’s lost income. Currently, the Republicans stimulus plan is valued at approximately $1 trillion while the Democrats plan is valued at about $3.5 trillion. Both sides are in favor of moratorium evictions and an additional direct stimulus payment to all Americans, however, Republicans want to cut the unemployment benefits to a portion of lost wages while Democrats are seeking to keep it unchanged. Other issues that remain unresolved are funds for states and local governments and liability protections. Negotiations are set to continue throughout the weekend with the hopes that a deal will be struck by Sunday evening.
Markets were mostly higher this week. The S&P 500 surged 1.75% and closed at 3,271. The Dow Jones lost -0.15% and closed at 26,428. Year-to-date, the S&P 500 is up 2.38% and the Dow Jones is down -6.14%.
Interests rates fell lower this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.22% and 0.54%, respectively.
The spot price of WTI Crude oil rose fell week. Prices declined -2.18% and closed at $40.39 per barrel. Year to date, Oil prices are down -33.85%.
The spot price of Gold rose 3.82% and closed at $1,974.75 per ounce. Year to date, Gold prices are up 30.15%.
Initial jobless claims rose by 12,000 to 1.434 million and the four-week moving average of claims fell by 171,000 to 1.206 million. Claims fell by 25,000 in California, 13,000 in Florida, 11,000 in Louisiana, and by 7,000 in Texas. Claims rose by 17,000 in New York, 16,000 in Virginia, 8,000 in Nevada, and by 7,000 in Michigan.
Real GDP fell by -32.9% in the second quarter versus expectations for a decline of -34.5%
Personal consumption fell by -34.6% versus expectations for a decline of -34.5%
The Core PCE inflation index fell by 1.1% versus expectations for a decline of 0.9%
The PCE price index rose by 0.4%, in-line with expectations and the year-over-year rate rose 0.8% versus expectations for an increase of 0.9%
The Core PCE price index rose by 0.2%, in-line with expectations and the year-over-year rate rose by 1.0%, in-line with expectations
New orders for durable goods rose by 7.3% versus expectations for an increase of 6.9%
Durable goods orders ex-transports rose by 3.3% versus expectations for an increase of 3.6%
Core capital goods orders rose by 3.3% versus expectations for an increase of 2.2%
Core capital goods shipments rose by 3.4% versus expectations for an increase of 2.4%
The Conference Board index of consumer confidence fell by 5.7 points to 92.6 versus expectations for a reading of 95.0
The University of Michigan’s index of consumer sentiment fell by 0.7 points to 72.5 versus expectations for a reading of 72.9
Retail inventories fell by -2.6% versus expectations for a decline of -2.7%
Wholesale inventories fell by -2.0% versus expectations for a decline of -0.5%
Pending home sales rose by 16.6% versus expectations for an increase of 15.0%
Personal income fell by -1.1% versus expectations for a decline of -0.6%
Personal spending rose by 5.6% versus expectations for an increase of 5.2%
Fact of the Week
In both Florida and Texas, general sales tax revenue makes up at least 60% of their total tax revenue collected, the highest percentages in the nation. General sales tax revenue makes up just 12% of Vermont’s total tax revenue. Neither Florida nor Texas has a state income tax (source: Census Bureau).
The Sun Belt region of the United States continues to battle a high number of daily new cases of COVID-19, contributing largely to the country’s third straight day of over 1,000 deaths. The approximate daily currently hospitalized figure of about 60,000 has now reached levels last seen in late April. The state of Florida, particularly the Miami-Dade area, remains the most severely affected, with a 19.2% positivity rate versus the state positivity rate of 13.3%. President Trump announced yesterday that the Republican convention scheduled to be held in Jacksonville Florida next month will be canceled, citing the coronavirus “flare up”. During a House committee hearing this week, Moderna, Pfizer, Johnson & Johnson, and Merck all pointed out their plans to have a vaccine by 2021, with AstraZeneca stating that they would have an emergency based vaccine available by the end of this year.
On Tuesday night in Houston, police and fire fighters responded to a reported fire at the Chinese Consulate which was eventually discovered to be the result of barrels filled with burning documents. The Trump administration quickly responded by closing the consulate and ordering Chinese personnel to leave within 72 hours, angering China who is now accusing the United States of breaking down the “friendship bridge” that bands together the two countries. Secretary of State Mike Pompeo gave a speech yesterday, in which he called for engagement and empowerment of Chinese people, attempting to rally the people against the Communist Party of China. In fulfilling their promised retaliation, China announced Friday morning that it would close the American consulate in Chengdu, the capital of the Sichaun Province. The statement from the White House this morning states that China should “cease these malign actions rather than engage in tit-for-tat retaliation.”
Markets declined slightly this week. The S&P 500 fell -0.27% and closed at 3,216. The Dow Jones lost -0.74% and closed at 26,470. Year-to-date, the S&P 500 is up 0.61% and the Dow Jones is down -6.00%.
Interests rates fell slightly again. The 5 year and 10 year U.S. Treasury Notes are yielding 0.27% and 0.58%, respectively.
The spot price of WTI Crude oil rose this week. Prices rose 1.15% and closed at $41.22 per barrel. Year to date, Oil prices are down -32.49%.
The spot price of Gold rose 5.05% and closed at $1,901.80 per ounce. Year to date, Gold prices are up 25.34%.
Initial jobless claims rose by 109,000 to 1.4 million and the four-week moving average of claims fell by 17,000 to 1.36 million. Claims fell by 13,000 in Florida, 9,000 in Texas, and by 6,000 in Indiana. Claims rose by 45,000 in New York, 16,000 in Virginia, and by 11,000 in Tennessee.
Existing home sales rose 20.7% to a seasonally-adjusted-annualized-rate of 4.72 million units versus expectations for an increase of 21.4%. Sales were led by the West and South regions.
The FHFA house price index fell by -0.3% versus expectations for an increase of 0.3%
Sales of new single-family homes rose by 13.8% to a seasonally-adjusted-annualized-rate of 776,000 units versus expectations for 700,000 units.
Fact of the Week
57% of colleges anticipate they will offer “in-person” class instruction for the upcoming 2020-21 school year, just 9% will offer only online class instruction, while 29% of schools will provide a combination of “in-person” and online class instruction. The remaining 5% of schools have yet to decide as of Friday 7/10/20 (source: Chronicle of Higher Education).
Due to the uptick in coronavirus cases, a growing number of U.S. states and localities have mandated the use of masks and face coverings while in public. Georgia Governor Brian Kemp is suing Atlanta Mayor Keisha Lance Bottoms over the city’s mask mandate – which is punishable by a fine or up to six months in jail – claiming the measure is more restrictive than a state order that “strongly encourages face coverings” but does not require them. On the corporate side of things, Walmart, Kroger and Target announced Wednesday that they would will require customers to put on a mask or face covering inside stores.
“What we really need are drugs that, when given early, can prevent a symptomatic person from requiring hospitalization or very dramatically diminish the time that they’re symptomatic,” Dr. Anthony Fauci told Mark Zuckerberg during a Facebook Live interview. Looking for a treatment, he expects results for a clinical trial on monoclonal antibodies by late summer or early fall. The laboratory-produced proteins – described as “precise bullets” that can be developed from antibodies from other people who’ve been infected by COVID-19 – are hoped to be used to treat sick coronavirus patients as well as for prophylaxis.
Markets rose again this week. The S&P 500 jumped 1.27% and closed at 3,224. The Dow Jones rose 2.32% and closed at 26,671. Year-to-date, the S&P 500 is up 0.88% and the Dow Jones is down -5.3%.
Interests rates were fell slightly from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.28% and 0.62%, respectively.
The spot price of WTI Crude oil inched higher this week. Prices rose 0.12% and closed at $40.60 per barrel. Year to date, Oil prices are down -33.51%.
The spot price of Gold rose 0.69% and closed at $1,811.04 per ounce. Year to date, Gold prices are up 19.36%.
Business inventories declined by 2.3% in May
Retail sales increased 7.5% month over month in June.
The Philadelphia Fed manufacturing index fell by 3.4 points, better than concensus estimates for a larger decline.
Initial Jobless claims fell by 10,000 to 1.3 million in the week of July 11.
Industrial production increase by 5.4% in June, mostly lead by a large increase in automobile manufacturing.
CPI rose by 0.24% month over month in June.
Fact of the Week
Then market cap weighted performance of the top 5 stocks in the S&P500 (Microsoft, Apple, Amazon, Facebook, Google) has been +32% year to date. The performance of the remaining 495 stocks in the index has been -7.7% year to date. (Source: Strategas)
Hurricane season in 2020 has started with the earliest 6th named storm on record set to make landfall in the Northeastern U.S. tonight. Tropical Storm Fay is sustaining winds around 50 mph as of this morning and is expected to bring 2 to 4 inches of rain with some isolated areas expecting to see 7 inches. Tropical Storm Warnings are currently in effect for New Jersey, New York, and Connecticut as the Northeast prepares for flash flooding throughout the night. The storm gained structure and transformed into a Tropical Storm this morning and the potential exists for it to become a Category 1 hurricane which is defined by sustained winds of at least 75 mph.
Tensions in Libya escalated further this week after Turkey announced that they will be holding large scale naval exercises off the Libyan coast in anticipation of war in the eastern Mediterranean. One day later, the Egyptian media announced that the Egyptian Army will host their own military drills near the western Libyan border. Turkey has been stepping up its military efforts in Libya recently in support of the government, which is currently battling a civil war. Egypt supports the opposing party in Libya, and this is the first show of force by the Egyptian Army since Turkey began intervening.
Markets rallied this week. The S&P 500 spiked 1.79% and closed at 3,185. The Dow Jones rose 0.98% and closed at 26,075. Year-to-date, the S&P 500 is down -0.38% and the Dow Jones is down -7.44%.
Interests rates were unchanged from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.63%, respectively.
The spot price of WTI Crude oil fell slightly this week. Prices fell -0.37% and closed at $40.50 per barrel. Year to date, Oil prices are down -33.67%.
The spot price of Gold rose 1.31% and closed at $1,799.18 per ounce. Year to date, Gold prices are up 18.58%.
Initial jobless claims fell by 99,000 to 1.3 million and the four-week moving average of claims fell by 63,000 to 1.4 million. Claims fell by 37,000 in New York, 23,000 in Florida, and by 12,000 in Oklahoma. Claims rose by 39,000 in Texas, 30,000 in California, and by 4,000 in Connecticut.
The ISM non-manufacturing index rose by 11.7 points to 57.1 versus expectations for a reading of 50.2
Wholesale inventories fell -1.2%, in-line with expectations
The producer price index (PPI) fell by -0.2% versus expectations for an increase of 0.4% and the year-over-year rate fell by -0.8%
PPI ex-food, energy and trade services rose by 0.3% versus expectations for an increase of 0.1% and the year-over-year rate was flat
Fact of the Week
The money used by the Federal Reserve in its lending programs and asset-buying programs was “digitally created” by the Fed, i.e., the Fed does not technically “print” money (it does not have a printing press) but rather it creates money with the press of a button on a keyboard. The Fed is forecasted to create$5 trillion of new money between March 2020 and December 2020 (source: Federal Reserve)
The United States is setting records for new confirmed daily coronavirus cases heading into Independence Day weekend as dozens of states have either delayed reopening plans or have taken steps back in the process. After reporting a record 509 new cases yesterday, Washington State Governor Jay Inslee announced that he would pause reopening in the state for 2 weeks and directed all businesses to require face coverings for employees and customers. The announcement from the Washington Governor comes after Texas issued a similar order requiring face coverings as Houston hospitals were forced to move ICU patients as far as 50 miles away as a result of overcapacity. The state of Arizona announced this morning that 91% of its ICU beds are occupied by COVID-19 patients and only 196 beds remain available as 4,433 new cases were reported yesterday in the state. The United Kingdom released travel guidelines easing restrictions on travelers from a handful of countries excluding the United States, continuing to require Americans to quarantine for 2 weeks upon arrival.
In the past two months, the United States has added back a shocking 7.5 million of the 20.7 million lost jobs in April. About 40% of the job gains were in the leisure and hospitality sector as most restaurants and bars have reopened. New jobs in the retail trade industry accounted for about 10% of the total job gains in the past two months as clothing stores and general merchandise stores also reopened. Education and health services jobs also increased substantially, as many dentists, physicians, and private educators went back to work. The rate of job growth in the past two months have smashed expectations as the unemployment rate was expected to rise to 19.1% in May but instead fell to 13.3% while the unemployment rate in June fell to 11.1% versus 12.5% expected.
Markets surged higher in the holiday shortened trading week. The S&P 500 jumped 4.07% and closed at 3,130. The Dow Jones spiked 3.29% and closed at 25,827. Year-to-date, the S&P 500 is down -2.13% and the Dow Jones is down -8.33%.
The yield curve steepened this week as the level of rates remained relatively unchanged. The 5 year and 10 year U.S. Treasury Notes are yielding 0.30% and 0.67%, respectively.
The spot price of WTI Crude oil rose this week. Prices rose 4.68% and closed at $40.29 per barrel. Year to date, Oil prices are down -34.01%.
The spot price of Gold rose 0.23% and closed at $1,775.35 per ounce. Year to date, Gold prices are up 17.01%.
Initial jobless claims fell by 55,000 to 1.4 million and the four-week moving average of claims fell by 1118,000 to 1.5 million. Claims fell by 47,000 in Oklahoma, 8,000 in New York, 3,000 in California, and by 3,000 in Florida. Claims increased by 6,000 in Wisconsin and by 5,000 in Texas.
Nonfarm payrolls rose by 4.8 million in June versus expectations for an increase of 3.2 million
Private sector employment in the ADP rose by 2.4 million versus expectations for an increase of 2.9 million
The unemployment rate fell to 11.1% versus expectations for a reading of 12.5%
Average hourly earnings fell -1.2% versus expectations for a decline of -0.8% and the year-over-year rate rose 5.0%
Factory orders increased by 8.0% versus expectations for an increase of 8.6%
Pending home sales rose by 44.3% versus expectations for an increase of 19.3%
The S&P/Case-Shiller home price index rose by 0.3% versus expectations for an increase of 0.5%
The Conference Board index of consumer confidence rose by 12.2 points to 98.1 versus expectations for a reading of 91.5
The ISM manufacturing index rose by 9.5 points to 52.6 versus expectations for a reading of 49.8
Construction spending fell by -2.1% versus expectations for an increase of 1.0%
Fact of the Week
In 2000, Bobby Bonilla was let go from the New York Mets. Instead of receiving the $5.9 million he was due in his contract, the two parties agreed to defer payment until 2011, when the Mets would begin paying Bonilla $1.19 million every July 1st, through 2035. To this day, he has received $11.9 million dollars from the Mets. If he had instead taken the $5.9 million and invested it into the S&P500 on January 1st 2000, he would have $12.5 million. (Source: ESPN, Bloomberg)