Week in Review: June 26, 2020 The Re-Acceleration in Covid19. End of the Bull Market?

A weekly recap of major events and headlines affecting the market with individual investors in mind.

Economy:

  • China tells the US that “meddling” in Hong Kong and Taiwan could jeopardize farm product purchases in phase one trade agreement
  • U.S. considering $3.1 billion in new export tariffs on European goods, the EU planning to proceed with its digital tax
  • The FHFA Housing Price Index for April increased 0.2% following a 0.1% increase in March.
  • The weekly MBA Mortgage Applications Index fell 8.7% following an 8.0% spike in the prior week.
  • Weekly jobless claims for the week ending June 20 decreased by just 60,000 to 1.480 million
  • May data showed new home sales rebound 16.6% m/m to a seasonally adjusted annual rate of 676,000, durable goods orders rebound 15.8% m/m, and personal spending rebound 8.2% m/m

Covid-19:

  • White House COVID-19 briefing with VP Mike Pence and health experts: Hospitalization is “broadly available” in these states with increasing cases and can be expanded; Two months ago 15% of cases required hospitalization, now that number is roughly 5%; over 50% of new cases are Americans under 35
  • An announcement from Texas Governor Abbott that the state will be rolling back some prior reopening provisions (e.g. dine-in restaurants back to 50% capacity from 75%; bars or establishments getting 51% or more of revenue from alcohol forced to close except for pickup and delivery)
  • In the wake of its stress tests for banks, the Federal Reserve said it will be restricting share buybacks and capping dividend payments by banks in the third quarter
  • Dr. Scott Gottlieb CNBC interview:
    • Most things are still open at 75-100% in Texas, they just paused opening of larger venues
    • He believes death rate will tick back up.
    • Florida might be worse shape than Texas.
    • New York might have renewed infections in 4-6 weeks.
  • Boston Fed President Rosengren said he thinks the second half rebound is likely to be less than what was hoped for at the onset of the pandemic.
  • COVID-19 hospitalizations are increasing in 17 states, according to ABC News

Other News:

  • Potential Quarter-end rebalancing into bonds and out of stocks
  • Regulators relaxed some Volcker Rule restrictions, allowing banks to increase their investments in a broad set of venture capital funds. Out of an abundance of caution, the Fed will require banks to suspend share repurchases and cap dividend payments in the third quarter following its stress tests results.
  • Apple will reportedly re-close some stores in four states due to COVID risks
  • Microsoft announces changes to retail operations. These changes will include closing Microsoft Store physical locations. Microsoft will continue to invest in its digital storefronts on Microsoft.com, and stores in Xbox and Windows, reaching more than 1.2 billion people every month in 190 markets.

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