Unemployment Climbs, Strong Recoveries from Retail & Manufacturing, and Trouble for High Yield
July 17, 2020 | FIRESIDE CHARTS
The declines in first-time unemployment claims have stalled, and in fact jumped by over 100,000 last week to top 1.5 million on a non-seasonally adjusted basis. With the extended PPP deadline looming at August 8th and the additional $600 boost to unemployment benefits set to expire this month, a growing contingent of Americans—and the American economy as a whole—could soon be in for a shock. In better news, retail sales rose sharply in June, beating analyst expectations and climbing nearly back to their pre-Covid levels, and manufacturing activity has largely recovered too. Trouble could be brewing in the high yield market though as corporate bankruptcies and defaults surge. While there haven’t been too many major surprises yet, it’s likely to be an interesting (and revealing) earnings season…
1. New unemployment claims are now increasing. Without a new or renewed PPP package, this could get much worse…
Source: WSJ Daily Shot, from 7/17/20
2. Retail sales have almost completely recovered. This may falter as some of the volume is due to pent up demand and the recent surge of new Covid cases may also weigh in…
Source: WSJ Daily Shot, from 7/17/20
3. The NY Fed shows a full manufacturing recovery… Will it be sustainable?
Source: WSJ Daily Shot, from 7/16/20
4. The Philly Fed also shows full recovery in manufacturing.
Source: WSJ Daily Shot, from 7/17/20
5. Another welcome positive surprise in June. However, as more states pause or reverse re-openings, we should expect more modest numbers in July…
Source: WSJ Daily Shot, from 7/16/20
6. Many segments of the economy have a long way to go before full recovery…
Source: WSJ Daily Shot, from 7/16/20
7. With mortgage rates hitting record lows, it is time to (again) to spread the refinance word!
Source: WSJ Daily Shot, from 7/17/20
8. Returns have been quite asymmetric!
Source: WSJ Daily Shot, from 7/16/20
9. This does not bode well for high yield bonds…
Source: WSJ Daily Shot, from 7/17/20
10. Neither does this. This is not a drill for high yield bonds…
Source: WSJ Daily Shot, from 7/16/20
11. China’s second quarter GDP rebounded nicely, but can we trust the data?
Source: WSJ Daily Shot, from 7/16/20
12. New global Covid-19 cases has reached a quarter million/day.
Source: JHU CSSE, as of 7/17/20
13. Almost 1/3 of these daily confirmed cases are here in the U.S.
Source: JHU CSSE, as of 7/17/20
14. With the U.S. suffering the worst outbreak of any country, right now I’m not sure anyone wants us…
Source: WSJ Daily Shot, from 7/16/20
Disclosure: The charts and info-graphics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be helf in client accounts.