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U.S. equities and bonds appeared to consolidate in a wide ranging channel during the last week. Individual countries diverged and appeared to decrease their price correlation with one another. Various sectors within U.S. equities saw divergence as well. Technology, for example, had a rough week. Price action appeared to reflect tough conditions for equity bulls as rallies were mostly sold during the primary sessions.
The Conference Board’s Leading Economic Index was positive for August, however, the rate of increase slowed raising concerns that the recovery in the real economy is slowing.
Corona virus infection rates as measured by rt.live indicate that the U.S. continues to struggle in capping COVID infections. Anecdotal evidence suggests the U.S. is experiencing a back to school bump in infections. On a positive note, excess deaths as measured by the CDC were very close to normal verses predicted meaning that COVID is not really moving the needle in regard to excess deaths anymore. The CDC data lags behind the rt.live data so the recent bump in infections could cause a slight bump in excess deaths in the coming weeks. Within the CDC data one can clearly see the effects of the first and second waves of COVID. Two waves were expected given what we know about pandemics. If the CDC data trend continues, then COVID will continue to become less of a problem over time. This coupled with the advent of a vaccine could yield improvement in real economic activity.
The coming week is a heavy economic data release week. Economic data releases combined with a number of market related news stories have the potential to move markets in both directions.
Link to the CDC data: https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm#dashboard
Bookmark this COVID-19 site. https://rt.live
– Best
Cory Haupt
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