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.
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.
The gradual reopening of the US economy has started to lift Main Street sentiment from depressed levels, according to the Federal Reserve’s (Fed) Beige Book. Despite growing concerns about rising COVID-19 cases in several pockets of the country, economic activity has returned in most industries.
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.
Despite the gradual reopening of the economy in several states, sentiment on Main Street remains suppressed, as the effects of COVID-19 appear to be keeping a lid on American optimism in the most recent Federal Reserve (Fed) Beige Book.
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.
This year, Teacher’s Appreciation Week runs from May 4 to May 8, but rather than being in the classroom, most teachers will be at home, navigating their calling outside the classroom.
What a ride 2020 has been for investors. The fastest bear market ever, now one of the steepest recoveries ever. After being down more than 30% for the year on March 23, this recovery is extremely impressive. In fact, before yesterday, over the previous 13 days the S&P 500 had gained nearly 25%, for the best 13-day bounce since July 1938.
You don’t need to file by April 15th, and you should think about the benefits.
Stocks have rallied nicely off the March 23 lows on the back of a bold policy response from the Federal Reserve (Fed) and lawmakers in Washington, DC, which was followed by signs that a peak in growth of COVID-19 cases may come soon. At Wednesday’s close, the S&P 500 Index stood 19% above the March 23 closing low but down 17.7% for the year. That begs the question whether a positive year is possible with a pretty big hole still left to dig out of.