Financial data and economic news for the week ending October 9, 2020

 History's Greatest
Financial Bubble

For the week ending
October 9, 2020:

S&P500 up 3.8%
   (up 7.6% year-to-date)

Dow up 3.3%
   (up 0.2%)

Dow Utilities up 4.8%
   (up 4.8%)

Dow Transports up 5.0%
   (up 8.8%)

S&P 400 Midcaps up 4.9%
   (down 3.2%)

Small cap Russell 2000 up 6.4%
   (down 1.9%)

Nasdaq100 up 4.2%
   (up 34.3%)

Biotechs up 5.7%
    (up 10.2%).

With gold bullion up $31,
the HUI gold stock index was up 4.8%
     (up 40.6%)

 U.K.'s FTSE up 1.9%
   (down 20.2%).

Japan's Nikkei up 2.6%
   (down 0.2%).

France's CAC40 up 2.5%
   (down 17.3%).

German DAX up 2.9%
   (down 1.5%).

Spain's IBEX 35 up 2.9%
    (down 27.2%).

Italy's FTSE MIB up 2.8%
    (down 16.6%).

Brazil's Bovespa up 3.7%
    (down 15.7%),

Mexico's Bolsa up 5.0%
   (down 11.6%).

South Korea's Kospi up 2.8%
   (up 8.8%).

India's Sensex up 4.7%
   (down 1.8%).

China's Shanghai up 1.7%
    (up 7.3%).

Russia's MICEX up 0.6%
   (down 7.0%).



US  BONDS  &  MORTGAGES:
Ten-year Treasury bond yields
up seven bps to 0.77%
    (down 114bps year over year).

Freddie Mac 30-year
fixed mortgage rates
down one basis point to 2.87%
   (down 70bps y-o-y).

Fifteen-year rates
up one basis point to 2.37%
   (down 68bps).

Five-year hybrid ARM rates
down one basis point to 2.89%
    (down 46bps).

Jumbo mortgage
30-year fixed rates
down three bps to 3.08%
   (down 92bps).

Federal Reserve Credit
over the past year
expanded 80%.

M2 (narrow) "money" supply
over the past year
expanded 23.5%,

 

COMMODITIES:
Bloomberg Commodities Index
up 4.9% (down 9.4% y-t-d).

Spot Gold up 1.6% to $1,930
   (up 27.2%).

Silver up 4.5% to $25.108
    (up 40.1%).

WTI crude up $3.55 to $40.60
     (down 34%).

Gasoline up 7.1%
   (down 39%)

Natural Gas up 12.4%
    (up 25%).

Copper up 3.5%
   (up 10%).

Wheat up 3.6%
    (up 6%).

Corn up 4.0%
    (up 2%).



THE  NEWS:
Coronavirus:

(1)
October 5
– Bloomberg
(Jonathan Levin and
Kristen V Brown):
“Covid-19 is spreading again across most of the U.S., hammering rural America and smaller cities and raising anxiety in New York, as experts warn that school re-openings and colder weather may cause the situation to rapidly deteriorate. In 34 states, the seven-day average of new cases is higher now than it was a month ago. Although the virus has waned in populous states including California and Florida, it is wreaking unprecedented havoc in the Midwest and making an incipient return in parts of the Northeast.”


(2)
October 6
 – CNBC
(Amanda Macias):
“The Pentagon said… that top military leaders are self-quarantining after one of the Coast Guard service chiefs tested positive for the coronavirus. Coast Guard Vice Commandant Adm. Charles Ray tested positive for coronavirus on Monday after experiencing mild symptoms of the disease over the weekend.”



 OTHER  NEWS:
(3)
October 6 – Reuters (Marc Jones):
“The COVID-19 shock will double company default rates across the United States and Europe over the next 9 months, ratings agency S&P Global said…, although it noted that the record downgrade pace of recent months was now slowing. S&P predicted U.S. corporate default rates would rise to 12.5% from 6.2% and saw Europe’s rate going to 8.5% from 3.8%. ... Alexandra Dimitrijevic, S&P’s Global Head of Research, said that with the number of firms on downgrade warnings at record levels -- 37% of the companies S&P rates and 30% of the banks -- and credit quality dropping, default rates are set to jump.”


(4)
October 5
– Associated Press
 (Andrew Taylor):
“The government spent $6.6 trillion last year and borrowed 48 cents of every dollar it spent, CBO said. The numbers amount to a 47% increase in spending, led by $578 billion for the Paycheck Protection Program for smaller businesses, and a $443 billion increase in unemployment benefits over the past six months alone ... (with) an enormous $3.1 trillion deficit in the just-completed fiscal year, a record swelled by coronavirus relief spending that pushed the tally of red ink to three times that of last year. The Congressional Budget Office released the unofficial 2020 figures…, saying the deficit equaled 15% of the U.S. economy, a huge gap that was the largest since the government undertook massive borrowing to finance the final year of World War II. ”


(5)
October 3
– Wall Street Journal
(James Mackintosh):
 “September hurt shareholders, not only because stocks fell but also because the things they’d bought to protect their portfolios also fell. From the S&P 500’s high on the 2nd of the month, stocks, Treasurys, gold, bitcoin and the VIX volatility index all dropped. This total failure of hedging is unusual, but investors need to get used to the idea that Treasurys no longer provide the ballast for a portfolio. It wasn’t just the normal pattern of asset returns that broke down… High-quality stocks, companies with strong balance sheets and reliable profits, fell by more than the market. Smaller companies beat bigger companies.”


(6)
October 6
– Financial Times
(Stefan Wagstyl):
“The world’s billionaires have seen their fortunes soar to record levels during the Covid-19 pandemic, as many doubled down on risk in choppy financial markets and profited from the tech boom. Their collective wealth hit $10.2tn this summer, exceeding the previous high set in 2017, according to a widely followed annual study from Swiss bank UBS. The total number of billionaires reached 2,189, up from 2,158 in 2017.”


(7)
October 7
– Reuters:
“Billionaire wealth reached record high levels amid the COVID-19 pandemic, a report by UBS and PwC found, as a rally in stock prices and gains in technology and healthcare helped the wealth of the world's richest break the $10 trillion mark. The report, covering over 2,000 billionaires representing some 98% of the cohort's total wealth, found billionaire wealth grew by more than a quarter during the early months of the pandemic to reach $10.2 trillion in July, breaking the previous record of $8.9 trillion at the end of 2019. The figure represents a five- to ten-fold rise over the past 25 years… Between April 7 and July 31 this year, billionaires across every industry covered by the study saw their wealth rise by double digits, with billionaires in the technology, healthcare and industrial sectors leading the pack with 36%-44% gains.”


(8)
October 3
– Bloomberg
(Christopher Condon):
“Federal Reserve Bank of Boston President Eric Rosengren said the long period of low interest rates before the coronavirus pandemic is contributing to the depth of the current recession. ‘The slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult,’ Rosengren said in the text of a speech he’ll deliver Thursday… ‘The increased risk build-up, such as the reaching-for-yield behavior in commercial real estate or increased corporate leverage, make economic downturns including this one more severe,’ he said.”


(9)
October 3
– New York Times
(Jeanna Smialek,
Ben Casselman and
Gillian Friedman):
“The United States economy is facing a tidal wave of long-term unemployment as millions of people who lost jobs early in the pandemic remain out of work six months later and job losses increasingly turn permanent. The Labor Department said… 2.4 million people had been out of work for 27 weeks or more, the threshold it uses to define long-term joblessness. An even bigger surge is on the way: Nearly five million people are approaching long-term joblessness over the next two months. The same report showed that even as temporary layoffs were on the decline, permanent job losses were rising sharply.”


(10)
October 7 

– The Hill 

(Niv Elis):
“The number of people out of work for more than 27 weeks increased to 2.4 million in September, an increase of 32.5% from the previous month. There are 4.9 million people who have been unemployed between 15 and 26 weeks. Workers who have been separated from their jobs for more than 6 months typically have a more difficult time getting back to work even once the economy improves. ‘Last week we saw the biggest spike in long-term unemployment since they started measuring long-term unemployment,’ said Michele Evermore, senior researcher and policy analyst at the National Employment Law Project.”


(11)
October 5
– Reuters
(Dan Burns):
“U.S. commercial bankruptcy filings are up 33% so far this year with new cases in September surging by 78% from a year earlier as the recession triggered by the COVID-19 pandemic hits small businesses… Chapter 11 bankruptcy filings totaled 747 last month, up from 420 a year earlier and from 525 in August, legal services firm Epiq said… Year-to-date filings total 5,529, a third higher than in the first three quarters of 2019. ‘These commercial filings are primarily small businesses that do not have access to capital or stimulus,” Deirdre O’Connor, managing director of corporate restructuring at Epiq, said… ‘Unfortunately, those bankruptcies will continue to rise in the current economic environment.’”


(12)
October 6
– Reuters
(Dan Burns):
“The U.S. trade deficit surged in August to the largest in 14 years with imports climbing again, suggesting that trade could be a drag on economic growth in the third quarter. The… trade deficit jumped 5.9% to $67.1 billion, the widest since August 2006… Imports increased by 3.2% to $239 billion. Goods imports rose $6.5 billion to $203 billion. Exports increased 2.2% to $171.9 billion. Goods exports rose $3.5 billion to $119.1 billion. The closely watched trade deficit with China decreased $1.9 billion to $26.4 billion in August.”


(13)
October 7
– Yahoo Finance
(Myles Udland):
“The country’s youngest consumers are hunkering down during the pandemic. And their outlays have never been so low. Analysts at Piper Sandler on Tuesday released their latest semi-annual survey of U.S. teens, which found that teen spending fell to a record low during the fall. As of the firm’s fall survey, annual teen spending averaged just $2,150, down 5% from the spring, 9% from last year, and eclipses the previous survey low recorded in the fall of 2011.”


(14)
October 4
– Associated Press
(Jocelyn Gecker and
Suman Naishadham):
“In a year that has already brought apocalyptic skies and smothering smoke to the West Coast, California set a grim new record Sunday when officials announced that the wildfires of 2020 have now scorched a record 4 million acres — in a fire season that is far from over. The unprecedented figure… is more than double the previous record for the most land burned in a single year in California. ‘The 4 million mark is unfathomable. It boggles the mind, and it takes your breath away,’ said Scott McLean, a spokesman for the California Department of Forestry and Fire Protection… ‘And that number will grow.’”


(15)
October 5
– Wall Street Journal
(R.T. Watson):
“The second-largest cinema chain in the U.S. is closing all of its locations nationwide after reopening in August, escalating the pandemic-driven crisis facing the entertainment industry. Cineworld Group PLC’s Regal Entertainment Group’s decision to suspend operations at its more than 500 locations… follows a cascade of postponements for big-budget Hollywood films…”


(16)
October 7
– Bloomberg
(Josh Saul and
Leslie Patton):
“Who wants to buy a restaurant in the middle of a pandemic when you don’t know whether you can be open or how many people you can seat? California Pizza Kitchen… canceled an auction to sell itself after no buyers bid for the company, making its bankers the likely new owners. Ruby Tuesday Inc. went bankrupt Wednesday and plans to hand itself over to its lenders. With federal stimulus talks shelved and colder weather putting an end to outdoor dining, the industry’s pain may start to get even worse in the coming months.”


(17)
October 8
– Reuters
 (Gabriel Crossley):
“The recovery in China’s service sector activity extended into a fifth straight month in September, an industry survey showed on Friday, with hiring increasing for the second month in a row. The Caixin/Markit services Purchasing Managers’ Index (PMI) rose to 54.8 from August’s 54.0, the highest reading since June and staying well above the 50-mark that separates monthly growth from contraction.”


(18)
October 5
– Reuters
(Jonathan Cable):
“The euro zone’s economic recovery faltered in September with growing evidence sectors and countries in the bloc are diverging as a resurgence of the coronavirus forces the reimposition of restrictions on activity… Monday’s purchasing managers’ surveys showed services activity, which accounts for around two-thirds of the bloc’s GDP, slammed into reverse after sister surveys last week suggested factories was enjoying something of a revival.”


(19)
October 7
– Reuters
(David Brunnstrom,
 Ben Blanchard and
Yimou Lee):
“The U.S. national security adviser warned China… against any attempt to take Taiwan by force, saying amphibious landings were notoriously difficult and there was a lot of ambiguity about how the United States would respond. Robert O’Brien told an event at the University of Nevada in Las Vegas that China was engaged in a massive naval buildup probably not seen since Germany’s attempt to compete with Britain’s Royal Navy prior to World War One. ‘Part of that is to give them the ability to push us back out of the Western Pacific, and allow them to engage in an amphibious landing in Taiwan… The problem with that is that amphibious landings are notoriously difficult… It’s not an easy task, and there’s also a lot of ambiguity about what the United States would do in response to an attack by China on Taiwan,’ he added…”

Data source:
http://creditbubblebulletin.blogspot.com/2020/10/weekly-commentary-weird.html