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SubscribeSign inShare this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailAug 16, 2020Share this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailTHIS IS NOT INVESTMENT ADVICEPlease speak with a registered investment advisor or other qualified financial professional before making any investment decisions.If you asked me to identify the single most important factor that caused people to underestimate the power of the economic rebound and the power of the stock market rebound that we’ve seen so far, I would point to the unprecedented amount of money that is being delivered into the hands of those with the largest propensity to spend it. The federal government quickly and aggressively made sure that a demand vacuum caused by lost wages did not take hold in the COVID economy. As you’ll read in this week’s summary, retail sales are now back to pre-COVID levels. Real time economic tracking data continues to point to a very sharp rebound in Q3.&nbsp;US experiencing the largest and fastest, non-wartime, fiscal support in historySource: BofAIf you would like to receive this macro summary directly to your mailbox every Sunday please subscribe. It’s freeAtlanta Fed GDPNow forecast is currently tracking at 26.2% for Q3, up from 20.5% last week.NY Fed GDPNow Forecast is currently at 14.8%, up from 14.6% last week.Core CPI inflation +0.62% m/m vs +0.2m/m expected.&nbsp; Y/Y core CPI was +1.6% (vs. +1.1% expected), strongest rise since 1991.Source: Miller Samuel Inc. and Douglas Elliman Real EstateUS July retail sales increased +1.2% vs 2.1% expected. Sales were +1.9% excluding autos.&nbsp;Source: MacquarieSource: MacquarieSource: Macquarie&nbsp;Source: MacquarieSource: Chase&nbsp;Initial jobless claims: 963K for first full week of August. This figure would still be an all time high, pre-pandemic.Job Openings &amp; Labor Turnover (JOLTS) report showed 5.89mln openings, still down 16% from February but the June figure beat expectations handily (5.3mln).The NFIB’s Small Business Optimism down to 98.8 in July from 100 in June but in line with the data set’s historical average. Hiring intentions are picking up, a positive sign.Source: Wells FargoCoreLogic residential mortgage delinquency data: "Early-stage and adverse delinquency rates increased for the second consecutive month – high correlation to geographies most impacted by COVID-19"A study of $650bln worth of commercial mortgages (across ~40,000 loans) that were originated between 2013 to 2019 found that, even before the virus-led economic slowdown, mortgaged properties’ net income potential were frequently overstated relative to the amount underwritten by lenders.&nbsp;German survey of economic sentiment up to 71.5 from 59.3 previously. Crushes expectations of 58.US Industrial production&nbsp; +3.0% in July (+5.7% in June). Factory output +3.4%.First Fed Funds rate hike not priced in until 2024.New Zealand: RBNZ increased size of its asset purchases purchases from NZ$60bln to NZ$100bln.Mexico central bank cuts overnight rate to 4.5% from 5%.Source: Bloomberg&nbsp;The best leading indicator of the economic recovery has been the stock market. Stocks foreshadowed the current progress that’s been made for the economy’s path back to normal. With strong equity markets and a significant amount of US Treasury supply, one can’t help but wonder about the sustainability of the disconnect between a stock market rapidly approaching all time highs while the bond market offers a 10 year Treasury yield of 0.70%. Is there a reconciliation imminent? If so, will it be via a lower stock market or a lower bond market (higher yields)?&nbsp;US Weighted Average Maturity of Marketable Government Debt Outstanding.Source: BofASource: BloombergBall Corp, beverage-can manufacturer, whose credit rating is below investment grade, sold $1bln of 10yr bonds with a coupon of 2.875%.&nbsp;NY Fed: Implications of the COVID-19 Disruption for Corporate LeverageSource: New York FedFitch Ratings reports that the trailing-twelve-month (TTM) high-yield default rate in the US rose to 5.1% at the end of June.&nbsp;Source: BAMLGold fell ~6% on Tuesday, its worst one-day drop since 2013.&nbsp;Source: WingCapital InvestmentsSource: Goldman SachsSource: Goldman SachsOil prices reached their highest settlement price since early March. This week saw the third consecutive weekly decline in domestic crude inventory.Source: U.S. Energy Information AdministrationNatural gas-fired generation in the lower 48 states increased nearly 9% in the first half of 2020, compared with the first half of 2019, marking it as the fastest-growing source of electric power generation.The S&amp;P 500 is back near its previous all time high. The recent performance has been attributed to the following: bending of the COVID-19 infection curve, optimism about a vaccine in the fall as well as an executive order that extended enhanced unemployment benefits for jobless Americans. Despite the market’s rally, as you’ll read below, some sentiment measures are still not heading higher.&nbsp;Citi’s Panic/Euphoria model for equities remains in euphoria territory and at levels not seen since 2001.Bespoke Investment Group: “Thursday marked 100 trading days since the S&amp;P 500 made its COVID Crash closing low on March 23rd. Over this 100-trading day span, the S&amp;P rallied 51.3%”&nbsp;To repeat what we said here last week, “If the old Wall Street adage is true that, ‘the market climbs a wall of worry’, then stock markets globally still may have more room to push higher.”Simon Property Group, the largest mall owner in the US, in talks to have Amazon take over empty space left by department stores.Royal Caribbean Group, the cruise company, announced Wednesday that it had secured a $700mln credit facility.Significant excitement surrounding Apple as it prepares a series of service bundles. These bundles will let customers subscribe packages of Apple’s digital services at a lower monthly price. Dubbed “Apple One”, and expected to launch in October with the next iPhone release.Source: StatistaMergers &amp; Acquisitions activity heating up: 8 deals worth over $10bln signed in the past 6 weeks.&nbsp;In Q2, Apple, Microsoft, Google, Oracle and Facebook repurchased $35bln (up 10% y/y)Source: StoneXSource: Yardeni.comLast week we asked, “Where to look for market expectations of election outcomes? Look at Banks, Drugs and Defense stocks.”Source: Cornerstone MacroLast week we highlighted a new Hong Kong security law that permits for protesters to be arrested.&nbsp;A cargo carrier owned by Nagashiki Shipping ran aground and spilled 1,000 tons of fuel off the coast of Mauritius causing the country’s worst ecological disaster.Roughly 1.116 million barrels of Iranian fuel bound for Venezuela was seized by the US on Wednesday.&nbsp;On July 21, a virtual meeting summoned by president Cyril Ramaphosa of South Africa, the current chair of the African Union, deliberated the fate of the negotiations between Egypt, Ethiopia and Sudan over the Grand Ethiopian Renaissance Dam.Ed Yardeni asks, “In a world of zero interest rates, what is the fair value of the S&amp;P 500 forward P/E?”&nbsp;Mohamed El-Erian, Chief Economic Advisor at Allianz: 2 perspective on dollar's recent weakness: 1. How it benefits the US economy and 2. It demonstrates dollar’s fragility and potential loss of reserve currency status&nbsp;.Charts from Bank of AmericaIf you’d like to support the Primary Dealer Review, please feel free to share the publication with your friends and colleagues. This weekly summary expresses the views of the author as of the date indicated and such views are subject to change without notice. The author has no duty or obligation to update the information contained herein. Further, the author makes no representation, and it should not be assumed, that past investment performance is an indication of future results.Moreover, wherever there is the potential for profit there is also the possibility of loss.This weekly summary is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources.The author believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based.This weekly summary, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of the author.Share this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailNo posts© 2022 Primary Dealer ∙ ∙ &nbsp;is the home for great writingThis site requires JavaScript to run correctly. Please or unblock scripts

SubscribeSign inShare this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailAug 16, 2020Share this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailTHIS IS NOT INVESTMENT ADVICEPlease speak with a registered investment advisor or other qualified financial professional before making any investment decisions.If you asked me to identify the single most important factor that caused people to underestimate the power of the economic rebound and the power of the stock market rebound that we’ve seen so far, I would point to the unprecedented amount of...

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