Weekly Market Snapshot – June 8th, 2020

Created by: Sam Tenney

May US Jobless rate fell from 14.7% to 13.3%, a total payroll increase of 2.5 million for the month of May. The Bureau of Labor Statistics, however, has said if “Numbers were reported accurately the rate may be 3% higher,” making it 16.3%.¹
A sell off in long dated US treasuries has accelerated leaving the yield curve at the highest spread since 2016. US 30-year treasuries reached a 120 basis point spread on Friday. This is a sign that growth may be priced into the bond market again, although not necessarily inflation.²
Mortgage bond purchases by the Federal Reserve have reached $1.86 Trillion as of Wednesday June 3rd. Mortgage bonds have replaced commercial paper as the second largest Fed holding, behind US Treasuries as the largest holding. We will see if this trend continues and what that could mean for the mortgage market.³

SOURCES

1. https://www.bloomberg.com/news/articles/2020-06-05/u-s-jobless-rate-unex…

2. https://www.ft.com/content/772db971-75fc-4d02-afa4-95b289b5c4be

3. https://www.marketwatch.com/story/feds-balance-sheet-tops-7-trillion-sho…

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Weekly Market Snapshot – June 1st, 2020

Created by: Sam Tenney

US Purchasing Managers Index (PMI) data came in at 39.8 for May, a slight rebound from April’s all-time low record of 36.1. Chicago region PMI however came in at 32.3 for May, the lowest reading for the industrial heavy region in 11 years. ¹
US Spending fell a record 13.6% for April, the largest single month drop in history, the second largest fall being in March. However, US Personal income increased a record 4.2% as well due to the first round of stimulus checks.²
Continuing unemployment claims dropped last week, from approximately 25 million to 21.05 million, nearly 3.8 million less continuing claims. This may be an early sign of Americans returning to work. ³
US durable goods orders dropped 17.2% in April, passing March’s 16.6% drop. Once again transportation and aviation led the drop with orders falling 47.3% for the month. Boeing announced it had zero orders for the entire month of April.

SOURCES

1. https://www.marketwatch.com/story/chicago-pmi-weakens-to-323-in-may-from…

2. https://herald-review.com/news/national/morning-virus-brief-us-spending-…

3. https://www.marketwatch.com/story/us-initial-jobless-claims-rise-212-mil…

4. https://www.cnbc.com/2020/05/28/us-durable-goods-orders-april-2020.html

Weekly Market Snapshot – May 18th, 2020

Created by: Sam Tenney

Retail sales suffered a -16.4% plunge in April, the largest contraction ever recorded. Clothing and accessories stores were the hardest hit with an -89.3% drop in sales. ¹
Less than half of strip mall properties in the US have paid rent for May, as larger companies such as Bed Bath & Beyond, AMC, and Shake Shack seek deferral relief for their property payments. ²
Federal Reserve branch of Minneapolis head Neel Kashkari has said “The April jobs report will likely understate the economic pain … The real unemployment rate is probably around 23-24%”³

SOURCES

1. https://www.ft.com/content/145b6202-f5cc-416a-94a3-385d11cbc84f

2. http://archive.vn/7BzrC

3. https://www.businessinsider.com/unemployment-rate-fed-president-neel-kas…

Weekly Market Snapshot – May 4th, 2020

Created by: Sam Tenney

Unemployment has reached 14.7% in April due to extremely large daily job losses during the coronavirus lockdown. This is the highest unemployment rate seen in the US since World War II. ¹
Thursday, March 7th, 2-year U.S. government bond futures hit negative rates for the first time in history, implying the markets believe possibly negative federal funds rates could be seen in the next two years. Current law prevents the Federal Reserve from setting the funds rate below zero.²
The Saudi Arabian kingdom has suspended the countries government allowance and tripled the countries Value Added Tax (VAT) to shore up the countries balance sheet during the continuing collapse in oil demand caused by COVID-19.³

SOURCES

1. https://www.ft.com/content/2a297508-c8d0-4736-8c2f-9f4d16822f57

2. https://www.bloomberg.com/news/articles/2020-05-07/negative-u-s-policy-r…

3. https://www.france24.com/en/20200511-saudi-triples-vat-suspends-handouts…

Weekly Market Snapshot – May 26th, 2020

Created by: Sam Tenney

According to The Fortune 500 CEO survey, 91% of CEO’s expect “Business travel will become less frequent” and 82% believe “Nationalism will rise, and global supply chains will become less common”¹
UK Government guarantees could create a “Corona debt crisis” according to the CityUK Financial trade group. “First year zero interest loans could become a problem when these companies are still struggling in the future.” If the balance sheets on these companies fail to rebound in a year they could be subject to higher interest on these loans, upwards of 6% in some cases.²
In the International Monetary Fund’s (IMF) Global Financial Stability Report, three key areas of the Coronavirus crisis were identified that pose a longer term threat to global economic stability, corporate credit markets, volatility in emerging markets, and extremely low interest for banks.³

SOURCES

1. https://fortune.com/2020/05/20/ceo-survey-after-pandemic-ceo-daily/ (Paywalled)

2. http://archive.vn/yCEcz

3. https://blogs.imf.org/2020/05/22/covid-19-worsens-pre-existing-financial…

Weekly Market Snapshot – May 4th, 2020

Created by: Sam Tenney

First quarter U.S. Gross Domestic Product (GDP) growth has contracted -4.8% for the quarter. This is the largest contraction in GDP since 2009.¹
On Saturday, May 2nd, Warren Buffet addressed Berkshire Hathaway shareholders, telling them the company’s investment into airlines, 10% of each of the four major US airlines, was a “mistake” and that “the world has changed” due to COVID-19.²
US state pensions have lost 12.2% of funding in the first quarter, for an aggregate 62.6% total funding, since December 2019, according to the Wilshire Consulting branch. Some state senators have proposed congress provide more funding for state level pension systems.³

SOURCES

1. https://www.bea.gov/data/gdp/gross-domestic-product

2. https://finance.yahoo.com/news/warren-buffett-berkshire-has-dumped-all-o…

3. https://archive.vn/gcANG

Weekly Market Snapshot – April 20th, 2020

Created by: Sam Tenney

As of Monday, April 20th, oil opened at $11.23 a barrel for West Texas Intermediate (WTI) crude, marking almost 40 year lows for the price of crude oil. ¹
For the week of April 12th – 19th, 5.25 million more unemployment claims have come through. This marks ~22 million job losses total for the past month, effectively erasing as many jobs as have been created since June 2009.²
The Federal Reserve of Atlanta President Raphael Bostic has said businesses will face a “Survival Crisis in May”. “May is going to be a large issue … in terms of transitioning from a liquidity problem, to a solvency one.”³

SOURCES

1. https://fred.stlouisfed.org/series/UNRATE

2. https://archive.vn/exDnS

3. https://archive.vn/x7Ck8

Weekly Market Snapshot – April 27th, 2020

Created by: Sam Tenney

Colorado Governor Jared Polis has given the go ahead for Colorado businesses to re-open on May 3rd, with reduced workforces. “While some counties have 0 cases … Denver had a more significant outbreak, impacting about 5% of the population.” Other states are also looking at reopening plans.¹
Data analysts have found that only 15% of businesses in regions severely affected by coronavirus have been able to secure loans from the government’s PPP (Paycheck Protection Program). The money has largely been allocated to areas with no cases and little quarantining.²
US durable goods, commercial factory orders, have contracted at -14.4% for March, the largest drop in 6 years. The majority of this contraction is in the aviation industry, which lost around 16.3 billion dollars in orders. (Estimates for april)³

SOURCES

1. https://fred.stlouisfed.org/series/UNRATE

2. https://archive.vn/exDnS

3. https://archive.vn/x7Ck8

Weekly Market Snapshot – April 6th, 2020

Created by: Sam Tenney

As of April 3rd, the official federal reserve unemployment rate rose to 4.4%, ending the almost decade long employment growth. The period of recording missed the month’s end however, in which 10 million unemployment claims were made meaning real unemployment is likely much higher now.¹
The International Monetary Fund has warned after economic data continues to roll in that this reversal in economic growth may be bigger than the great financial crisis, with current projections being a -2.7% growth in GDP globally. Earlier projections had predicted a +3.0% growth.²
Researchers at Deutsche Bank have said national lockdowns are likely to start easing around mid-May, given new data from Wuhan China showing time-frames for easing of the virus transmission.³

SOURCES

1. https://fred.stlouisfed.org/series/UNRATE

2. https://www.ft.com/content/19d2e456-0943-42fc-9d2d-73318ee0f6ab

3. https://www.nasdaq.com/articles/when-will-countries-lift-their-coronavir….

Weekly Market Snapshot – March 2nd, 2020

Created by: Sam Tenney

As of Thursday, February 27th, major indices DOW, S&P, and NASDAQ posted -10% losses from all time highs. This is officially the fastest 10% correction to ever occur in the history of these indices, having only taken 6 days from the all time high.¹
The yield on the US Government 2-year treasury has fallen from 1.35% to 0.92% as of Friday, February 28th. This is almost 0.6% below the current Federal Funds rate, suggesting the bond markets believe the Federal Reserve needs to heavily cut current rates.²
Around 37% of the S&P 500 companies mentioned “Coronavirus” related profit troubles in their Q4 2019 earnings calls.³

SOURCES

1. https://www.cnbc.com/2020/02/27/this-is-the-fastest-stock-market-correct…

2. https://www.marketwatch.com/investing/bond/tmubmusd02y?countrycode=bx

3. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/weekly-m…{“fid”:”405″,”view_mode”:”teaser”,”fields”:{“format”:”teaser”,”alignment”:”left”},”type”:”media”,”field_deltas”:{“2”:{“format”:”teaser”,”alignment”:”left”}},”link_text”:”weekly_market_recap 3-02-2020.pdf”,”attributes”:{“class”:”media-element file-teaser media-wysiwyg-align-left”,”data-delta”:”2″}}]]