THE DATA IS POSTING RECORD SURGES

Is a “V” shaped recovery at hand? Retail sales jumped in May by the most on record and double the forecast. Sales soared 17.7%, the most in data going back to 1992.  US home builder optimism also made a record rebound, surging to 58 from 37 in April. Analysts had expected a 46 reading.

I must write these rebounds are from extremely depressed levels. However, the surges have greatly surprised most analysts including the Federal Reserve.

The President is about to propose a $1 trillion infrastructure plan. How will this impact economic outlook?

I ask a different question. How will this massive increase in debt amplified by a massive increase in money supply affect inflationary assumptions and interest rates? What are the unintended consequences?

The headlines are filled with stories of increased coronavirus cases, but I ask are these headlines disingenuous? Nationwide cases are up 1.0% vs the seven-day average of 1.1% according to Johns Hopkins, albeit there are some regional increases. Moreover, there are over 17 vaccines in stage 3 testing, many of which are offering great promise according to the National Institute of Allergy and Infectious Diseases.

Will Covid become a yesterday headline?

Equities rose on the on-growth optimism. Treasuries declined about a point.

Last night the foreign markets were up. London was up 0.61%, Paris up 1.11% and Frankfurt up 0.63%. China was up 01.4%, Japan down 0.56% and Hang Sang up 0.56%.

The Dow should open nominally higher on economic optimism overlooking regional increases in coronavirus cases. The 10-year is off 1/32 to yield 0.76%.

 

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.