Markets are set to open the last trading day of the week a little lower, though European markets have managed to buck that trend. Asia is all in the red including China which just broke an eight-day winning streak that saw the CSI 300 index which had risen an astonishing 17.5% over that time period.
The NASDAQ continues to dominate, even managing a positive day yesterday and we’re seeing the same pattern today with both the S&P 500 and DOW lower. The risk-off trade is persistent, with gold holding above $1800/oz and it will likely continue until we see further evidence virus cases have peaked or big vaccine developments.
The labour market data this week tells a story of a continuing economic rebound, but maintaining the labor market recovery is challenging when over fifty thousand new COVID infections are reported daily. Initial jobless claims also don’t revel the whole picture. The total number of Americans receiving unemployment benefits hit a new record when you include ALL PROGRAMS, not just normal UI. The chart below is from the Economic Policy Institute and tells a different story
, and highlights the deep recession the U.S. is facing. With some of the benefits from the new programs expiring in a little more than two weeks, congress is faced with a difficult decision.
The U.S. set a one-day record with more than 60,500 COVID cases. Leaders may want to dismiss the rising case count, stating that its only due to more testing. Calculated Risk reveals in a great chart
that shows this isn’t the sole reason why case numbers are sky rocketing, the ratio of positive tests is also increasing in the U.S. The number of positive tests needs to be well under 5% to really push down new infections.
Next week begins the fundamental reckoning. Second-quarter earnings season begins in earnest with the big U.S. banks. First up: banks. Citigroup and JPMorgan Chase report Tuesday, followed by Bank of America and Morgan Stanley on Thursday. We already know this round of profit statements will be brutal: S&P 500 profits likely contracted 44% overall, according to FactSet. More important than the actual results will be the outlooks and how many companies will reinstate formal guidance for the year.Canada housing
starts climbed 8.3% in June to 211.7k units, up from 195.4k units in May. Montreal and Toronto led the way with new builds recording increases of 69% and 68% respectively – in total, five of ten provinces saw higher starts in June, a surge that was largely driven by the multi-family segment. Looking across a longer-term horizon, construction of apartments has kept starts activity healthy in recent years, offsetting the downtrend in single-detached starts. Despite this recent uptick, Canada Mortgage and Housing Corp. expects starts to remain weak in 2020 before fully recovering next year. Diversion:
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