The economy is showing more signs of life as the end of Q2 approaches. The Chicago Fed National Activity Index has crossed sharply into growth territory, beating expectations by a more than 12 point gap, and manufacturing activity is following a similar trajectory. Meanwhile, new home sales may have surged 16.6% in May, but existing home sales have plummeted nearly 27% year-over-year and inventories of existing homes for sale are hovering at multi-year lows. Competition among apartment-dwellers turned house-hunters looks poised to remain stiff as the pandemic wears on. And the S&P 500® Index again owes the bulk of its performance to just five companies (we're sure the names won't surprise you) as 495 of the 500 are still struggling at a weighted average of -8%. The Nasdaq though has been leaving the other major indices in its dust. The index just hit another record high and the gap between it and the S&P and Dow is the largest it's been since 1983. But could a declining USD be enough to undermine its success? Turning to the international stage, the European recovery looks to still be going strong, but despite its success in managing COVID-19, Japan is struggling. Will the island nation be further battered by COVID-induced disruptions to the supply chain?
1. More good news from the Chicago Fed...
Source: WSJ Daily Shot, from 6/23/20
2. U.S. manufacturing enjoyed a solid rebound and is just a hair below expansion mode (greater than 50)!
Source: WSJ Daily Shot, from 6/24/20
3. The regional Fed surveys continue to show recovery....
Source: WSJ Daily Shot, from 6/23/20
4. Sales are down partly due to supply of homes being down...
Source: WSJ Daily Shot, from 6/23/20
5. Despite increased demand to move out of large apartment buildings, many homeowners don't want the public in their homes during a pandemic...
Source: WSJ Daily Shot, from 6/23/20
6. Within the S&P 500, 5 stocks are up 23% while the remaining ~495 are down 8%.
Source: WSJ Daily Shot, from 6/24/20
7. The tech-heavy NASDAQ has outperformed the S&P 500 by 20% over the past year...
Source: WSJ Daily Shot, from 6/24/20
8. It is hard to see what might derail the tech juggernaut. Might it be a declining USD?
Source: WSJ Daily Shot, from 6/23/20
9. Does the emperor have any clothes? The Fed now owns almost 40% of all U.S. Treasury bonds with maturities of 10-30 years...
Source: WSJ Daily Shot, from 6/23/20
10. Europe also enjoyed a significant economic recovery:
Source: WSJ Daily Shot, from 6/23/20
11. However, Japan, which so far has largely avoided Covid, is still reeling...
Source: WSJ Daily Shot, from 6/23/20
12. Covid is not just infecting our seniors...
Source: WSJ Daily Shot, from 6/24/20
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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 a recommendation to take any action. Individual securities mentioned may be held in client accounts.