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SubscribeSign inShare this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailAug 23, 2020Share this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailTHIS IS NOT INVESTMENT ADVICE.&nbsp;Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.A few big retailers reported this week - Wal Mart, Home Depot, Target, Lowe’s - and all of them beat consensus estimates by a healthy spread. Notable was the growth in online sales which pretty much doubled for each of the companies as COVID accelerated the secular trend toward online shopping. Also this past week, several reports related to the housing market show that there is no end in site to its strength. What’s driving this? Employment among people earning $60,000/year or more fell less during the recession and has recovered more quickly than for the rest of the labor market What’s more, by the end of June, employment among workers in this income cohort was just 0.5% below the pre-pandemic level.&nbsp;Source: Opportunity InsightsIf you would like to receive this macro summary directly to your mailbox every Sunday please subscribe. It’s freeAtlanta Fed GDPNow is currently tracking at +25.6% for Q3, down from 26.2% last week.New York Fed GDP Nowcast is currently at 14.6%, down from 14.8% last week.Goldman Sachs: Reopening at a GlanceSource: Goldman SachsUS Initial Jobless Claims rise to 1.1mln vs 926k expected.&nbsp;Source: JP MorganSource: JP MorganIHS Markit US Manufacturing PMI increased to 53.6 in Aug, beating market forecast of 51.9NAHB housing index, +6 points to 78 in August tying record high set December 1998Housing Starts +1.496mln vs 1.24mln expected, for perspective this is about 20% above the average level throughout 2019Source: JP MorganSource: RefinitivExisting home sales: 5.86mln unit pace in July, up 24.7% m/mFederal Reserve Minutes from Fed Policy meeting were released:Last week the Federal Reserve Bank of San Francisco (FRBSF) released a paper called, “Average-Inflation Targeting and the Effective Lower Bound”. An important paper that lays the groundwork for a change in the Fed’s approach to its current 2% inflation targetAveraging inflation over a fixed time windowAveraging over the business cycleApproximately 7% commercial mortgage-backed securities (CMBS) were transferred to special servicing in the first half of 2020.&nbsp;“TIPS (real) yields are approaching record lows, meaning that investors have to be confident realized inflation will exceed current market pricing, or face losses. Today's negative real yields of almost 1% for 10-year TIPS eat into inflation compensation. And that's if the securities are held to maturity. On a mark-to-market basis, duration exposure is extremely high.” - BloombergUS corporate investment-grade issuance reached an annual record $1.35trln Monday.Crude Oil Inventories&nbsp;came in at -1.632M vs -4.512M last week“WASHINGTON—The Trump administration approved an oil leasing program for the Arctic National Wildlife Refuge on Monday, opening up the pristine 19-million-acre wilderness to drilling for the first time and making it difficult to unwind the decision should Democrats recapture the White House in November.”&nbsp;The S&amp;P 500 rose to an all-time high on Tuesday Source: FidelityMoller Maersk, the world’s largest container shipping company&nbsp; (transports ~15% of the world’s seaborne freight) reported earnings above consensus (+$1.7bln EBITDA).Wal-Mart same store comps +9.3% for the quarter vs 5.4% expected.&nbsp;Home depot same store comps +23.4% vs 10.9% expected.&nbsp;Airbnb has filed confidential IPO paperwork this past weekApple’s market capitalization surpassed $2tln on Wednesday making it the biggest company in the world and the first U.S. company to hit this valuation.Nvidia Corp. reported strong Q2 profit and revenue on Wednesday trumping the street’s estimatesProtecting United States Investor from Significant Risks from Chinese CompaniesIn a memorandum published on June 4, 2020, the Trump administration issued a set of recommendations intended to address the long-running inability of the U.S. audit regulator (the PCAOB) to inspect accounting firms based in China whose audit clients are listed in U.S. stock markets.Current Situation:&nbsp;Recent Events:&nbsp;Next Steps:&nbsp;Potential Issues:Delisting Chinese companies in the U.S. will drive them to ‘secondary’ listing in Hong KongWith the looming possibility of delisting, it is possible that Chinese companies launch preemptive bids to try and privatize companies before more strict takeover codes are allowed.What to Expect:&nbsp;Top 5 ADRs Subject to Delisting (by avg. daily volume) (Name: Market Cap in $mln)Alibaba Group Holding Limited: 680,661NIO Inc.: 15,969GSX Techedu Inc.: 23,865JD.com, Inc.: 97,259Pinduoduo Inc.: 121,174Sole listings which trade over $5mln per day are particularly vulnerable to accelerated delisting as several of these have Weighted Voting Rights, marking them as not eligible for onshore listing in China implying a Hong Kong listing is the most practical for them.SoleNIO Inc.: 15,969GSX Techedu Inc.: 23,865Pinduoduo Inc.: 121,174Baidu, Inc.: 42,935TAL Education Group: 46,291Source: ForbesThe Chinese economy has staged a sharp recovery since the trough in March. For Q2, GDP grew at 11.5% q/q and 3.2% y/y. The economy is now bigger than it was pre-COVID.Source: Barclays&nbsp;Last week, prompted by Ed Yardeni, we asked “In a world of zero interest rates, what is the fair value of the S&amp;P 500 forward P/E?” Yardeni offers that, “There’s a precedent for our current times: World War I was followed by the Spanish Flu pandemic of 1918, which infected an estimated 500 million people and killed as many as 50 million. Given that the world population was 1.8 billion back then, that implied a 28% infection rate and nearly a 3% death rate. Both stats are currently significantly lower for the COVID-19 pandemic. Today, the global population is 7.5 billion. There have been 20 million cases and 735,000 deaths worldwide as of yesterday."An Economic Snapshot of the World During COVID. Charts from Macquarie BankBAML Charting the RecoveryIf you’d like to support the Primary Dealer Review, please feel free to share the publication with your friends and colleagues. Thank you for your readership.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 23, 2020Share this postWeekly Macro Summarywww.weeklymacro.comCopy linkTwitterFacebookEmailTHIS IS NOT INVESTMENT ADVICE.&nbsp;Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.A few big retailers reported this week - Wal Mart, Home Depot, Target, Lowe’s - and all of them beat consensus estimates by a healthy spread. Notable was the growth in online sales which pretty much doubled for each of the companies as...

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