17 Jul THERE IS A V SHAPE RECOVERY…WILL IT CONTINUE?
June’s retail sales greatly exceeded expectations, rising 7.5% from May. A year over year measure of retail sales climbed 1.1% in June according to the Commerce Department. This is marked improvement from the 20% decline in April but is still below the long-term trend of 2.0%.
Personally, I am encouraged and surprised by the data as rhetorically I would not expect retail sales to be higher than one year ago.
Other data was also very encouraging as both the Philadelphia Fed and the NAHB Housing Index also greatly surprised on the upside.
The economy is in a V recovery but the question that no one can answer is whether the increase in Covid cases will stifle the unexpectedly strong rebound. To adamantly suggest the strength or the lack of thereof of tomorrow’s economy is rhetorical at best, with caveat being the approval of a vaccine.
I believe all must accept the notion Covid is very political, a politization that is amplified because of the significance of November’s election. In my view there is a very stark difference between the two candidates and the outcome can greatly influence the direction and philosophy of the country.
What will happen today?
Last night the foreign markets were mixed. London was up 0.52%, Paris down 0.17% and Frankfurt up 0.41%. China was up 0.69%, Japan down 0.32% and Hang Sang up 0.47%.
The Dow should open nervously flat as Netflix posted tepid earnings, challenging the un relenting advance of many mega sized technology and social media companies perhaps suggesting the prices are priced way beyond perfection. The 10-year is up 4/32 to yield 0.61%.