Financial data and economic news from last week

For the Week

ending September 4:

S&P500 down 2.3% 

    (up 6.1% y-t-d)

Dow Industrials down 1.8% 

    (down 1.4%)

Dow Utilities up 0.6% 

    (down 7.3%)

Dow Transports down 0.9% 

     (up 3.0%)

S&P 400 Midcaps fell 2.5% 

     (down 8.0%)

Small cap Russell 2000 lost 2.7% 

     (down 8.0%)

Nasdaq100 sank 3.1% 

     (up 33.1%)

Biotechs dropped 2.4% 

     (up 3.4%)

With gold bullion down $31, 

the HUI gold stock index 

lost 2.6%

     (up 40.4%).

Ten-year US Treasury bond yields 

slipped a basis point to 0.72% 

    (down 120bps). 

FOREIGN  STOCKS:

U.K.'s FTSE down 2.8% 

    (down 23.1%).

Japan's Nikkei up1.4% 

    (down 1.9% y-t-d).

France's CAC40 down 0.8% 

     (down 16.9%)

German DAX down 1.5% 

    (down 3.1%). 

Spain's IBEX 35 down 2.0% 

    (down 26.8%). 

Italy's FTSE MIB down 2.3% 

     (down 17.5%)

Brazil's Bovespa down 0.9% 

    (down 12.5%)

Mexico's Bolsa down 3.6% 

    (down 16.3%)

South Korea's Kospi up 0.6% 

    (up 7.8%). 

India's Sensex down 2.8% 

    (down 7.0%). 

China's Shanghai down 1.4% 

    (up 10.3%)

Russia's MICEX down 2.0% 

    (down 4.1%).

US  MORTGAGES

Freddie Mac 30-year fixed 

mortgage rates up two bps 

to 2.93% 

    (down 56bps year-over-year). 

Fifteen-year rates 

down four bps to 2.42% 

    (down 58bps). 

Five-year hybrid ARM rates

 up two bps to 2.93%

    (down 37bps). 

Jumbo mortgage 

30-year fixed rates 

up a basis point to 3.12% 

    (down 109bps)

Federal  Reserve  Credit 

over the past year,

surged 87%. 

M2  money  supply 

over the past year 

surged 23.1%

COMMODITIES:

Bloomberg 

Commodities Index 

down 1.0% 

    (down 10.5% y-t-d). 

Spot Gold 

down 1.6%

 to $1,934 

    (up 27.4%). 

Spot Silver

 down 3.9% 

to $26.712 

    (up 49.1%). 

WTI crude oil 

down $3.20 

to $39.77

     (down 35%). 

Gasoline down 10.5% 

    (down 30%)

Natural Gas down  2.6% 

    (up 18%). 

Copper up 1.4% 

    (up 10%). 

Wheat up 0.3% 

    (down 2%). 

Corn down 0.3% 

     (down 8%).

CORONAVIRUS:

(1)

August 31 

– Reuters 

(Allison Martell and 

Julie Steenhuysen): 

“High-profile COVID-19 vaccines developed in Russia and China share a potential shortcoming: They are based on a common cold virus that many people have been exposed to, potentially limiting their effectiveness, some experts say.”

(2)

August 31

 – CNBC 

(Will Feuer):

 “Coronavirus cases are rising across more than half of the nation even as the outbreak slows across former hotspots in Arizona, Florida, California and Texas. New cases are up by at least 5%, based on a seven-day average, in 26 states as of Sunday, compared with just 12 states a week ago…”

(3)

September 1 

– Reuters

 (Susan Cornwell and 

David Morgan):

 “Tens of thousands of loans worth billions of dollars may have been subject to fraud, waste and abuse in the $659 billion taxpayer-funded program aimed at helping small U.S. businesses survive the coronavirus pandemic, according to a report released by Democratic lawmakers…”

(4)

September 1 

– Reuters 

(Anthony Boadle): 

“Brazil reported 42,659 new cases of the novel coronavirus and 1,215 deaths from the disease caused by the virus in the past 24 hours… Brazil has registered 3,950,931 cases of the virus since the pandemic began, while the official death toll from COVID-19 has risen to 122,596…”

ALL  OTHER  NEWS:

(5)

September 2 

– Bloomberg 

(Joanna Ossinger): 

“Both over-the-counter derivatives and options on U.S. Treasury futures show volatility priced at about six times its normal level, compared with a rate of two times normal in the 2008 and 2012 presidential elections and three times in 2016, when Donald Trump surprised pollsters by defeating Hillary Clinton. Meanwhile, the cost of hedging exposure to U.S. corporate bonds also shows investors paying more for protection than in previous elections…”

(6)

August 31 

– Bloomberg 

(Lu Wang): “

"A sentiment gauge, Citigroup’s panic/euphoria model, which tracks metrics from options trading to short sales and newsletter bullishness, is having its longest run of extreme bullishness since the early 2000s. The record-setting advance in U.S. stocks is fueling readings of investor bliss not seen since the dot-com era. Gains in Tesla Inc. and Apple Inc. following stock splits helped push the Nasdaq 100 past 12,000." 

(7)

August 30 

– Financial Times 

(Joe Rennison): 

“After blasting higher in the financial-market ructions of March, the real yields on some high-quality US corporate bonds, which strip out inflation expectations from basic nominal yields, have slipped below zero. For investment-grade corporate bonds with a maturity of between one and three years, this marks the first dip into negative territory since March 2017…”

(8)

August 31 

– The Hill 

(Niv Elis): 

“There is a growing gap between what markets are expecting and a likely wave of defaults among struggling companies before summer 2021, according to an analysis by S&P Global… The report by Nick Kraemer, head of S&P Global Ratings Performance Analytics, found that the dire state of the U.S. economy suggests a higher rate of defaults for what are known as speculative-grade companies.”

(9)

August 31 

– Wall Street Journal 

(Alexander Osipovich): 

“New data show a number of ways in which the individual-trading boom has reshaped the U.S. stock market. Here are… takeaways: Trading by individuals accounts for a greater chunk of market activity than at any time during the past 10 years… The individual-investing boom has led to historically high levels of ‘dark’ trading, in which stocks are bought and sold on opaque private venues, rather than public exchanges… The firms that execute individual investors’ orders have enjoyed surging volumes…” 

(10)

September 3 

– Wall Street Journal 

(Kejal Vyas and 

Vibhuti Agarwal): 

“From India to Mexico and Brazil, the world’s biggest developing countries are witnessing some of the steepest economic contractions on record, throwing tens of millions out of work and turning back the clock on gains against poverty. India’s economy shrank by nearly a quarter, 23.9%, during the April to June period compared with a year earlier, its worst performance since quarterly figures began in 1996."

(11)

September 1 

– Reuters 

(Swati Pandey): 

“Australia fell into its deepest economic slump on record last quarter as coronavirus curbs paralysed business activity, while fresh outbreaks threaten to upend any immediate recovery, piling pressure on the government to keep fiscal taps open… Data from the Australian Bureau of Statistics on Wednesday showed the country’s A$2 trillion ($1.47 trillion) economy shrank 7% in the three months to end-June from a 0.3% decline in the March quarter.”

(12)

September 2 

– Bloomberg 

(Vince Golle): 

“The U.S. federal budget deficit will soar to a record $3.3 trillion this fiscal year, swelling government debt to a size bigger than the economy in the wake of massive spending to cushion Americans from the coronavirus pandemic, according to the Congressional Budget Office’s latest tally. Debt held by the public will reach $21.9 trillion in the fiscal year ending September 2021, or the equivalent to 104.4% of gross domestic product, up from 98.2% in the current year… Debt will increase to $33.5 trillion at the end of 2030, or 109% of GDP; the previous 10-year projection, in March, saw the figure at 98% in 2030.”

(13)

September 2 

– Financial Times

 (Katrina Manson): 

“The Trump administration said it would now require Chinese diplomats to seek permission before visiting US universities, meeting local government officials or hosting large cultural events in America. US secretary of state Mike Pompeo … as President Donald Trump takes a hard line against Beijing in the run-up to the US presidential election in November.”

(14)

September 2 

– CNBC 

(Diana Olick): 

“The White House issued an order through the Centers for Disease Control and Prevention that declared evictions during a pandemic are a national health hazard. The unprecedented order by the CDC came after a federal moratorium on evictions from properties with federally backed mortgages expired at the end of July.”

(15)

September 2 

– Wall Street Journal 

(Kate Davidson): 

“U.S. debt has reached its highest level compared to the size of the economy since World War II and is projected to exceed it next year, the result of a giant fiscal response to the coronavirus pandemic. The Congressional Budget Office said… federal debt held by the public is projected to reach or exceed 100% of U.S. gross domestic product, the broadest measure of U.S. economic output, in the fiscal year that begins on Oct. 1. That would put the U.S. in the company of a handful of nations with debt loads that exceed their economies, including Japan, Italy and Greece. This year the ratio is expected to be 98%, also the highest since World War II.”

(16)

September 3 

– Reuters 

(Lucia Mutikani): 

“The U.S. trade deficit surged to its highest level since 2008 in July amid a record increase in imports, suggesting that trade could be a drag on economic growth in the third quarter. The… trade deficit jumped 18.9% to $63.6 billion, the highest since July 2008… Imports soared by a historic 10.9% to $231.7 billion. Goods imports vaulted 12.3% to $196.4 billion. Exports increased 8.1% to $168.1 billion. Goods exports rose 11.9% to $115.5 billion.”

(17)

September 4 

– Reuters 

(Lucia Mutikani):

 “Nonfarm payrolls increased by 1.371 million jobs last month after advancing 1.734 million in July, the Labor Department’s closely watched employment report showed on Friday. The unemployment rate fell to 8.4% from 10.2% in July. Economists polled by Reuters had forecast 1.4 million jobs added in August and the unemployment rate sliding to 9.8%.”

(18)

September 1 

– CNBC 

(Diana Olick): 

"Nationally, home prices in July were 5.5% higher than in 2019. 

That is a marked increase from the 4.3% annual gain seen in June, according to CoreLogic. Falling mortgage rates helped bolster the pent-up demand from spring, when home sales ground to a halt due to the start of the coronavirus pandemic.”

(19)

September 1 

– Reuters 

(Lucia Mutikani): 

“U.S. construction spending barely rose in July as an increase in outlays on private projects was almost offset by a plunge in public construction projects… Spending on private construction projects advanced 0.6%, boosted by investment in homebuilding amid record-low mortgage rates.”

(20) 

September 1 – New York Times (Ben Casselman): 

“Tens of thousands of restaurants, bars, retailers and other small businesses have already closed. But many more have survived, buoyed in part by billions of dollars in government assistance to both businesses and their customers. 
The United States faces a wave of small-business failures this fall if the federal government does not provide a new round of financial assistance."

(21)

September 1 

– Wall Street Journal 

(Amrith Ramkumar): 

“A swift recovery in fuel consumption by U.S. drivers is petering out, 

posing new challenges to the oil market, economy and global energy industry. After demand for gasoline surged from mid-April to late June, consumption has stayed relatively flat in the past two months and remains well below its prepandemic levels”

(22)

September 1

 – Reuters 

(Nick Carey and 

Rachit Vats): 

“Toyota… reported a 23% drop in U.S. new vehicle sales in August versus the same month in 2019, as a two-month industrywide shutdown of auto production in the spring to halt the spread of COVID-19, as well as an uncertain economic recovery, weighed on sales.”

(23)

September 2 
– Financial Times 
(Joe Rennison): 

“Companies have raised more debt in the US bond market this year than ever before… A $2bn bond from Japanese bank Mizuho and a $2.5bn deal from junk-rated hospital operator Tenet Healthcare helped nudge overall US corporate bond issuance to $1.919tn so far this year, surpassing the previous annual record of $1.916tn set in 2017, according to… Refinitiv."

(24)

August 31 

– MarketWatch 

(Joy Wiltermuth): 

“U.S. corporations now owe a record $10.5 trillion to creditors, either in the form of bonds or loans, a stunning 30-fold increase from a half-century ago, 
according to a new BofA Global Research report. ... Half of investment-grade corporate debt, or $3.6 trillion, resides within the borderline BBB credit-ratings category, only a few notches away from speculative-grade, or ‘junk,’ territory.”

(25)

September 1 

– Bloomberg

 (Christopher Maloney): 

“The Federal Reserve has snapped up $1 trillion of mortgage bonds since March, a record pace of purchasing… The Fed bought around $300 billion of the bonds in each of March and April, and since then has been buying about $100 billion a month. It now owns almost a third of bonds backed by home loans in the U.S. Buying the securities has pushed mortgage rates lower, with the average 30-year rate falling to 2.91% as of last week from 3.3% in early February."

(26)

September 2 

– Bloomberg: 

“Warning signs are flashing for China’s $45 trillion banking industry, just when Beijing needs it the most to keep the world’s second-largest economy on its recovery path. Enlisted to ease the financial hardship of millions of people and businesses hurt by the pandemic, Chinese banks are under increasing stress. Bad debt has hit a record and capital buffers are eroding. Bank executives and analysts predict the damage is likely to continue in the second half of this year.”

(27)

August 31 

– Reuters 

(Nallur Sethuraman, 

Chandini Monnappa, 

Derek Francis, 

Sachin Ravikumar, 

Chris Thomas and 

Anuron Kumar Mitra): 

“India’s economy contracted at its steepest pace of 23.9% in the June quarter as the pandemic lockdown dented consumer and business spending, putting pressure on the government and central bank for further stimulus and a rate cut.”

(28)

September 1

 – Reuters 

(Jamie McGeever and 

Marcela Ayres): 

“Brazil’s economy shrank in the second quarter by the most on record as anti-coronavirus lockdown measures slammed activity in almost every sector, dragging Latin America’s largest economy back to the size it was in 2009. The pandemic triggered a 9.7% fall in gross domestic product from the prior quarter…, and an 11.4% decline compared with the same period last year.”

(29)

September 1 

– Reuters 

(Michael Nienaber): 

“German retail sales fell unexpectedly in July…, dashing hopes that household spending in Europe’s largest economy can drive a strong recovery in the third quarter from the coronavirus shock… Retail sales were down by 0.9% on the month in real terms in July after a revised drop of 1.9% in June and a 13.2% jump in May, when authorities eased lockdown measures.”

(30)

September 1 

– Financial Times 

(Katrina Manson): 

“China’s military is set to double its arsenal of nuclear warheads over the next decade, as it races to become a ‘world-class’ force, according to a Pentagon report… The unclassified, 200-page version of the Department of Defense’s annual report to Congress charts ‘staggering’ amounts of new military hardware as Beijing looks to expand its overseas military footprint in an attempt to rival the US. ‘China is already ahead of the United States in certain areas,’ said the report.”

(31)

September 2 

– Forbes

 (Michael Peck): 

“China has the largest navy in the world. And it’s not just big, but it’s getting better. ‘The PRC [People’s Republic of China] has the largest navy in the world, with an overall battle force of approximately 350 ships and submarines including over 130 major surface combatants,’ states the U.S. Department of Defense’s 2020 annual report to Congress… ‘In comparison, the U.S. Navy’s battle force is approximately 293 ships as of early 2020.’ In itself, that statistic is somewhat misleading: While the People’s Liberation Army Navy (PLAN) has more warships than the U.S. Navy, the American fleet is ahead in tonnage due to having larger warships, including 11 aircraft carriers that weigh in at 100,000 tons apiece.”