07242020 :: Friday finance week in review

A partial digest of what we learned:

  • Pending new home sales for the month of June again jumped considerably since setting a record for the month of May. Another historic era of white flight from urban centers is in motion, and mortgage companies are “just making hay right now.”

  • Initial jobless claims in the US (for the week ending July 18) increased for the first time since the last week of March, 2020.

  • AMEX earnings signal a collapse in consumer spending.Volumes were down considerably. The company also upped its loss provisions.

  • The bankruptcy knell sounded for BJ Services, marking another firm in the troubled American energy sector to seek protection.

  • Gold trended higher, nearing its all-time record. While there’s little evidence it is effective in hedging inflation, it may hedge the irrational quite well. The American White House such as it is, a bonkers COVID-19 situation in the US, justifiable civil unrest, and a further souring of the relationship with China continue to drive it up. It now sits near its all-time high of $1,920, set in September 2011.

  • The US services sector remains in a state of contraction. The IHS Markit US Services PMI has yet to break 50 since January 2020.

  • Long-term Treasury yields continued to sink since their recent peak in June. We are at or near April levels in the 10Y, 20Y, and 30Y. Safety is being sought.

  • The US and China ordered the closure of each others’ consulates. The escalating tensions put downward pressure on equities and gave gold an additional tailwind.

  • The EU passed a new stimulus package, notable for its centralization of representation; the European Commission will raise capital in the markets on behalf of all 27 member states.

  • Senate Republicans attempted to show leadership on further stimulus after a dangerous game of wait-and-see. Nothing concrete has emerged as of yet.

  • The DXY continued to drop, though the dollar gained on the yuan for the week, indicating appetite for risk is still lacking.