July PMI Data Shows Recovery Chugging Along

We’ve written quite a bit lately about the deterioration in high-frequency data. Indicators of mobility (such as auto and air travel, commuting activity, restaurant diners, etc.) leveled off in July due to the latest wave of COVID-19 cases. The strong rebound in the job market reflected in May and June jobs data has faded, based on the increase in continuing claims reported last week by the US Bureau of Labor Statistics. Read more

Dollar Weakness May Continue

The US dollar was remarkably strong during the first quarter of 2020, benefitting from the flight to safety and rallying to nearly a 10% year-to-date gain at the stock market’s low point on March 23. However, as equity markets have recovered, and the US has continued to fight the COVID-19 pandemic, the dollar has given up nearly all of those gains. We think this trend may continue, and if so, it would have important implications for a range of asset classes. Read more

Moving to the Next Phase on the Road to Recovery

The US economy has made impressive progress in recent weeks. As the economy re-opens, the way we assess the recovery has changed. In March and April, we were looking for evidence that growth in COVID-19 cases was decelerating—which thankfully it did—along with evidence that a recession was priced into stocks and that stimulus measures were sufficient to get us through the crisis. We used our Road to Recovery Playbook, shown below, to help us determine how the market was progressing in its bottoming process. Read more

Retail Sales Beat Shows Consumers Coming Back Strong

COVID-19 has decimated global demand as lockdowns materially re-shaped consumer and business behavior. Even as states have begun to re-open, significant questions remain about how demand could recover. The May retail sales print provided one of the first glimpses of that answer, rising 17.7% month over month and marking the largest monthly gain since data began in 1992. Read more

Challenges Abound in the US Service Sector

Recent economic data confirms that the US economy has entered a recession, led by the consumer, which accounts for more than two-thirds of the economy based on gross domestic product (GDP).  The consumer spending collapse was evident from March’s personal consumption expenditures data released last Wednesday, which showed a record 7.5% month-over-month drop in consumer outlays. Read more

When Will The Recession Officially Start?

With 22 million jobs lost in the past four weeks, a record drop in retail sales, and huge drops in industrial production and housing starts, it is safe to say we are likely in a recession. Even the Federal Reserve (Fed) in the recent Beige Book said that “economic activity contracted sharply and abruptly.” We highly doubt the Fed would say that if they didn’t believe the economy was in a recession. Read more