[Market Madness] Edition 0097
Nervous Jitters
The elephant and donkey show
Well folks, the GOP released their draft of the COVID 19 stimulus that is now going to the House to be picked apart. Early indicators suggest that both parties are divided on numerous points in the bill, so deliberations are likely to take some time. For me, and many others, it was not surprising that there are discrepancies across party lines for key parts of the bill. As divided as the fine folks on the hill are, it is surprising that the bill is actually going to go onto the floor to debate and enhance. For those looking for updates on the unemployment side, there are speculations, but I’d wait until the bill is signed and done before moving any marbles.
Onto the markets. As investors weigh the upcoming bill, U.S. markets were down today, following suit with rising COVID 19 cases and tensions. Big companies are reporting earnings this week, and investor sentiment appears to be cautious based on today’s sell off. The Fed also has announced an extension to their emergency lending program into December as the FOMC members buckle down for their two day meeting (today and tomorrow). Interesting news is likely to come out in their press conference following the meeting’s end tomorrow afternoon. Overseas, the major indices were mixed. On the day, oil is down, volatility is up, and gold is up.
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Fundamentals
Tuesday’s Close:
Dow Jones: -0.77%
S&P 500: -0.64%
NASDAQ: -1.27%
US 10 YR: 0.584%
Crude OIL: $40.93
Market Madness Portfolio: -0.63%
COVID 19 Global Cases: 16,540,137
Indices Overseas:
FTSE 100: +0.40%
Nikkei 225: -0.26%
Hang Seng: +0.69%
TEDRATE: 0.13
LIBOR (3 month): 0.26963%
Consumer confidence slips
In July, the consumer confidence index fell 6 points, from 98.3 in June to 92.6 in July. This dip comes as a greater impact of rising COVID 19 cases are starting to once again impact the United States. Reuters had estimated the index to drop to 94.5, so the actual result was worse than what was anticipated. Much of the blame in the drop of consumer confidence comes back to actions states have had to take in order to get things under control. Closures have begun to resume, and reopening phases have been rolled back. The hard push is still set on schools reopening for in-person lessons, with many wondering how that possibly can be safe/the right move at this moment.
Now, with the CDC out of the loop from the flow of vital COVID 19 data, many begin to wonder how much manipulation is occurring before ‘the numbers’ are shown to the public. Mind you, this is still something we as a nation have been condemning as we see it in other places in the globe, but might be doing it ourselves.
Coming out early next month will be the retail sales figures for July, which will be another telling statistic for how the economic recovery is going. It might be safe to assume that with declining consumer confidence, retail sales will also see a dip. We might also see a rise in personal savings and deposits — which is something we saw at the peak of the first wave.
In the latest rounds of earnings, McDonald’s was one company that reported a sour top line revenue (a decline of 30%). What is more interesting was the trend that they’ve been looking at and predicting will become more of a long-standing reality: digital orders and delivery. As conditions has become a little better within the past months (generally speaking, before this new wave), the company had noticed that sales were increasing as people’s willingness to let someone else do the cooking increased. A majority of their orders came in the form of digital and many also took advantage of the new delivery option as well. Now, you don’t have to even wait in the drive-thru for your McDouble and 20 piece McNuggets, you can wait on the couch! It is an interesting trend to see, and I imagine more food service companies will be reporting similar trends. Many of the Dunkin’ stores in my area are still drive-thru only, and the lines tend to move relatively quick from what I am assuming are people using the ‘order ahead’ function through the mobile app.
What we might start to see, if declining consumer confidence becomes a longer trend, would be a retraction in individuals going to these restaurants at all, something that will make already down revenue numbers worse.
Quick Takes
Prescription price war. (via CNBC)
More on Shelton’s contentious Fed candidacy. (via WSJ)
Pfizer beats forecast. (via WSJ)
What are the markets saying about the U.S. recovery? (via WSJ)
Eurozone banks to hold back dividend payouts until January 2021. (via FT)
Reader’s Corner
The reader may have noticed a little change in branding! I am adjusting to a more open sub-header (a financial journal above the rest) if in the event that I move away from a daily publication schedule. With work starting soon, I have to shift my priorities and maintain a balance with the things I like to do outside of work and that includes doing this newsletter. As a result, I may change my publishing schedule to something a little less rigorous, but also increase the quality and length of the publications to even out what would normally be delivered. If you have any thoughts on suggestions for me moving forward, please don’t hesitate to use that button below “send me comments/feedback!” Thank you again!
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