DE | Weekly | Global Markets | Cautious Road to Recovery? Second Wave or Not? – 6/15/20

Posted June 15, 2020 by rvillareal

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Cautious Recovery…

Nonfarm Payrolls, up 2.5 million jobs in May, signaled a faster-than-expected recovery in the Labor Market after a huge downdraft in April. Coming activity figures for May this calendar week, including Retail Sales (release Tuesday for May) and Industrial Production (release Tuesday for May) are expected to have rebounded modestly from April lows. The worst of an Economic Tsunami now seems behind, despite more horrible negative figures for Q2, i.e., Real GDP down 40%, annualized, yet to be released (July 27).

But the Virus Again?

Concerns on a second wave of infections re-emerged as some states, such as Texas, Florida and California, recently reported their highest daily confirmed cases so far, which could be related to hasty Reopenings. This triggered the worst sell-off for the equity market in more than two months on Thursday, after technology companies had pushed the Nasdaq to a record high the previous day.

Here, if the virus were to have a big second wave, there would be increasing risks of new shutting-downs or delaying of Reopenings, hence another decline or delays in economic Recovery. This is scary for the stock market, especially at the high valuations that existed, thus was the main reason for the selloff.

Table 1

Key U.S. and Global Coming Economic Indicators and Events—

“Look Ahead” (June 15 to June 26)

	Release	Time (EST)	Act. / DE / Consen.	Comment/Event/Venue
U.S.	Fed Speakers: Kaplan Daly Powell   Clarida Mester Rosengren   Retail Sales (May)   IP (May)   Hous. Starts (May)     Ext. Hm. Sales (May)   Mkt. Svcs. PMI (Jun) Mkt. Mftg. PMI (Jun)   Gds. Trade Bal. (May)   Dur. Gd. Ords. (May)   Q1 GDP (3rd)   Pers. Spend. (May) PCE May	June 15-June 19   Mo 11:00 am Mo 12:30 pm Tu 10:00 am   Tu 4:00 pm We 4:00 pm Th 10:15 am   Tu 8:30 am   Tu 9:15 am   We 8:30 am   June 22-June 26 Mo 10:00 am   Tu 9:45 am Tu 9:45 am   Th 8:30 am   Th 8:30 am   Th 8:30 am   Fr 8:30 am Fr 8:30 am	5.1% / 7.8% MoM   1.7% / 2.8% MoM   19% / 23.5% MoM     -3% / -4.6% MoM   42 45   -$70B / -$70B   8.5% / 12.5% MoM   -5% SAAR   5.1% / 5.2% MoM unch. MoM	Discussion w/ Money Marketeers of NYU Inclusivity and economic recovery Testimony to Senate Banking Committee semi-annual Economic and policy outlook Fed’s response to COVID-19 Economic outlook   Sales likely rebounded slightly as many states lifted restrictions. Containment measures put a floor to production amid weak demand. Housing Market rebounded on low mortgage rates and Reopenings.   Home Purchases likely stayed weak due to activity restrictions. Business Sentiment expected to improve yet still remain soft.   Trade Balance likely widened slightly on weak Imports. Expected to have rebounded after a plunge but soft demand persists. Final revision of Q1 GDP, little change.   Early data showed a slow rebound in Consumption; Core prices stayed low.
EUR	ZEW Expect. (Jun) ECB Eco. Bulletin	June 15-June 19 Tu 5:00 am Th 4:00 am	45	Investor sentiment could be curbed by market fluctuations and concerns on a second wave of infections
CHN	New Hm. Price (May) IP (May) Retail Sales (May) Fixed Asset (May)     1-Yr Loan Pr. Rate 5-Yr Loan Pr. Rate	June 14-June 19 Su 9 :30 pm Su 10:00 pm Su 10:00 pm Su 10:00 pm   June 21-June 26 Su 9 :30 pm Su 9 :30 pm	0.38%  YoY 2.8% / 5% YoY -4.5% / -2% YoY -8.8% / -6% YTD     Cut 5 bps / Hold Cut 5 bps / Hold	Activity continued to recover in May while prolonged restrictions weighed on Retail Sales. Fixed Asset Investment may edge up during recovery.     PBOC expected to cut broadly after it downgraded the economic outlook.
JPN	Tert. Ind. Act. (Apr) Trade Balance (May) National CPI (May)     All Ind. Act. (Apr) Tokyo CPI (Jun)	June 15-June 19 Mo 12:30 am Tu 7:50 pm Th 7:30 pm   June 22-June 26 Th 12:30 am Th 7:30 pm	-4.4% /-7.9% MoM -1035B /-990B yen 0.15% /0.2%YoY     -4.1% MoM 0.5% YoY	Likely contracted amid social-distancing. Set to fall with weak worldwide demand Temporarily picked up on food and entertainment prices. Factories continued to contract amid social-distancing. Likely picked up on food and entertainment prices.
U.K.	BoE Decision	June 15-June 19 Th 7:00 am	Hold / Hold	Hold through at least end-2021 while expanding asset purchases.
BRA	BCB Decision	June 15-June 19 We TBD	Cut 75 bps / Cut 75 bps	Expected to cut rates rapidly until they reach zero, before starting QE.