[Market Madness] Edition 0070
Trade Lightly
Trade scares
Well folks, it looks like the markets are set to open green this morning, recovering from the overnight scare investors had regarding the U.S. - China trade deal. White House trade advisor Peter Navarro made some comments about the trade deal that were misconstrued by investors, causing a panic selloff in the futures markets. After some clarification, the futures recovered and are set to open the day significantly in the green.
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Fundamentals
Tuesday Close:
Dow Jones Industrial Avg: +0.50%
S&P 500: +0.43%
NASDAQ: +0.74%
US 10 YR: 0.720%
Crude OIL: $40.20
Market Madness Portfolio: +0.43%
COVID 19 Global Cases: 9,284,547
Indices Overseas:
FTSE 100: +1.21%
Nikkei 225: +0.50%
Hang Seng: +1.62%
TEDRATE: 0.12
LIBOR (3 month): 0.29663%
On stimulus
The challenge over government stimulus is far from over. The folks on Capitol Hill have been throwing around the idea of another round of stimulus checks. Donnie has voiced support of further supporting the American people. Many people appear to be growing worried that the original rounds of stimulus were the major support brace for the economy. With their expiration coming soon, curious onlookers wait and see how the economy will perform without the additional, government-sponsored, capital pulsing through its veins.
Much of the data and arguments over stimulus are varied and wide-ranging. There are feelings that the ideas were too rushed and provided too much to groups where income was not as prevalent relative to this sudden boost. The additional $600 payments have helped calm the storm now, but have left some consumers feeling disinclined to return to full time work at a lower pay rate. Given also the concerns over potential food shortages due to shutdown farms and meat packing plants, prices have started to creep up on some of our favorite meats and produce. As a result, the already reduced dollar for some (without the $600 stimulus anymore) is reduced once more at the grocery store.
As we discussed before, the stimulus checks were really instrumental for folks who still needed to meet their fixed obligations, such as rent/mortgage, groceries and other necessities that we’re unable to put on hold during the pandemic. For the majority of people, their stimulus has come and gone, leaving them with continued bills to pay and financial uncertainty for the time being.
As of late, the idea of additional stimulus has followed the traditional bipartisan divide, leaving the fate of those truly in need uncertain.
On recovery
Globally, although we are continuing to see ‘second wave’ activity and speculations about growth and output, there are some data suggesting we are seeing forward progression. The purchasing managers composite output indices below from several nations show us that these nations are seeing revitalized private sector activities in manufacturing and services.
By no means is this signal a tell-all about where we are going, it is a nice sign that nations are finding ways to provide businesses with the necessary tools to resume production and service. Given the rise in ‘second wave’ activity, some are now suggesting a “W-shaped” rebound, factoring in the probability of a second phase of closings amid the ‘second wave’ of cases.
Our continued theme is uncertainty. It is not what anyone wants to hear after the months we’ve had already this year. However, if we know anything about the road ahead, it is that the road is long, curvy, and very, very uncertain. All we can really do is try and compare what we have been seeing to things that we have experienced in the past; a task which is growing more difficult due to the vast distinctions the current pandemic is presenting itself compared to events in the past. This has not presented itself to be much of an update, but the slowness of data and projections goes hand in hand with the slowness of the recovery. As always, more to come and many follow-ups will be presented here as progress is made.
Quick Takes
Recapping Apple’s developer conference from yesterday. (via CNBC)
Reopening schools to new challenges. (via WSJ)
MLB still has eyes set on an abbreviated 2020 season amid new challenges. (via WSJ)
The status of contact tracing here in the U.S. (via WSJ)
A new bond king is in town and its Jerome Powell. (Opinion via FT)
Starbucks moves into the plant-based meat market in their breakfast line. (via CNBC)
The Room Where it Happened, the WSJ’s book review. (via WSJ)
The latest news on the Wirecard scandal. (via WSJ)
Donnie blames rising COVID 19 case numbers on increased testing efforts, despite health experts consensus of increased spread. (via CNBC)
Newly-built home sales for May up 13%, well above expectations. Building permits are down, signalling less forward looking construction activity. (via CNBC)
Reader’s Corner
The editor would like the thank the readers for their continued support and their assistance in sharing social capital. Some dedicated readers have spent a lot of time with me, preparing me for interviews and sharing their network with me. These actions are the cornerstone to my professional and personal development and I am incredibly thankful.
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Behind the Madness
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