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Markets were mixed last week.
Reflections: Last Friday morning I shared an observation with Bill Wills on the radio: the Market is basically ignoring bad news. While the Market appears to be moving in a “V” shape recovery, the numbers for the economy are mixed at best. First time jobless claims (see below) remain high. Congress is considering another Trillion-dollar Coronavirus bailout. And the new earnings season is revealing some interesting things.
The Financials normally kick off a new quarterly earnings season. Companies are evaluated on how they did in the last quarter and for their new forecast. JPMorgan opened things off last week with a record quarter. A record for revenues ($34 billion) and earnings ($5.5 billion). But they also shared they had put aside almost $9 billion in reserves for anticipated loan losses. That’s a lot of loan losses. Which suggests some really hard times for some are still coming.
One of my favorite quotes: “It’s not what you look at that matters. It’s what you see.” Many market analysts have openly said they are discounting anything bad that happens in 2020. There are good things to point to… for sure. But it’s not all roses out there. And while many feel the Market is way ahead of itself, the concern over a pullback seems to be melting in the summer heat.
The S&P roller coaster last week: Down, up, up, down, and up.
Auto production: It is down -24.7% YOY.
Housing: Starts were up +17% in June and are down -4% YOY.
Inflation: The CPI (consumer) index is at +0.6 YOY.
Jobless claims: Claims were 1.3 million again. That’s 17 weeks over 1 million.
Retail sales: They were up +7.5% in June and are up +1.1% YOY.
Focus of the week: Earnings season is fully underway. What will the mixture of good news/bad news be? And will the Markets care?
Earnings season continues. Some of the companies reporting this week: AT&T, Chipotle, Coca-Cola, CSX, Discover, Lockheed Martin, Microsoft, Southwest Airlines, Tesla, Twitter, and Verizon.
Indicator focus: Existing home sales (Wed); jobless claims (Thu); and new home sales (Fri).