17 Jun 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%.