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CCCM WEEKLY MARKET REVIEW

July 29th, 2020

U.S. Markets: The major U.S. indexes finished the week mostly down after surrendering gains made early in the week.  At its peak on Thursday the S&P 500 moved within about 3% of its all-time high set in February.  The Dow Jones Industrial Average gave up 202 points finishing the week at 26,470, a decline of -0.8%.  The technology-heavy NASDAQ Composite declined for a second consecutive week, ending down -1.3%.  By market cap, the indexes finished the week mixed.  The large cap S&P 500 declined -0.3%, while the mid cap S&P 400 and small cap Russell 2000 rose 0.7% and declined -0.4%, respectively.

U.S. Economic News: The Labor Department reported the number of Americans seeking first-time unemployment benefits increased by 109,000 last week to 1.416 million.  Economists had expected 1.3 million new claims.  It was the first increase in 16 weeks, and a clear sign that the recent spike in COVID cases has resulted in another wave of layoffs.  Continuing claims, which counts the number of people already collecting benefits, fell by 1.1 million to 16.197 million.  That number is reported with a one-week delay.

The National Association of Realtors (NAR) reported sales of previously owned homes jumped a record 20.7% in June to a 4.72-million-unit annual rate.  Both single-family and condo/co-op sales posted record jumps.  Furthermore, sales rose across all regions, led by the West.  The monthly increase reflects the pent-up demand from the pandemic and record low mortgage rates.  Despite the increase, sales were still down 11.3% from the same time last year.  Months of available supply went back down to 4.0 from 4.8 in June.  Six months of inventory is generally considered to indicate a “balanced” housing market.

Sales of new homes jumped 13.8% last month to an annual rate of 776,000.  The reading was its highest since July of 2007 and exceeded expectations for a reading of 702,000.  The result followed a near 20% rebound the previous month resulting in the biggest back-to-back surge in sales since June 1980.  Year-over-year the momentum was weaker than before the pandemic, but remained up 6.9%.  All four regions posted sales growth from the previous month, and three of the four regions were higher than a year ago.  Months’ available supply slid from 5.5 months to 4.7—the thinnest inventory relative to demand in nearly four years. 

The Conference Board stated its leading economic indicators (LEI) index increased in June but the pace of its improvement slowed.  The LEI rose 2% in June following a revised 3.2% increase in May and a 6.3% drop in April.  The reading was below the consensus forecast of 2.4%.  Seven of its ten components made positive contributions.  Despite the improvement, the indicator remains 8.9% below its pre-recession high.   The six-month rate of change of the LEI improved to -8.4% from a low of -13.0% two months ago.  The year-over-year change also ticked up to -8.6%.  Both indicators suggest the negative economic momentum has diminished. 

Research firm Markit reported private sector business activity continued to improve in July, a sign that the economic recovery is continuing at the start of the third quarter.  Markit stated its flash Manufacturing Purchasing Managers’ Index (PMI) rose 1.5 points to 51.3—its highest level in six months, and in expansion for the first time since February.  Furthermore, its flash Services PMI increased 1.7 points to 49.6, also its best reading in six months, but still in contraction.  Both manufacturers and service providers were more optimistic about the outlook over the coming year, linked to expectations that the pandemic situation will improve.

The Chicago Federal Reserve reported its National Activity Index (CFNAI) rose for a second consecutive month in June to a record high.  The CFNAI gained 0.61 points to 4.11 showing that economic activity continued to recover after the initial rebound from the shutdown low in April.  The increase in June was led by stronger production and employment-related indicators.  Of the 85 individual indicators, 54 made positive contributions to the index.  As a result the Diffusion Index spiked 0.45 point, the most since August 1980.  The three-month average of the CFNAI also improved but remained in deep negative territory at -3.49—its lowest reading since 1965.

Finally: With a “heat dome” centered over the middle of the United States, it may not seem like “Christmas in July”.  However, for the nation’s toy retailers Christmas has sure come early!  Toy sales were up a whopping 16% in the first half of the year compared to last as Americans did their best to occupy their time at home.  Juli Lennett, NPD Group toys industry analyst said “We would never see this kind of unprecedented growth - I’ve never seen it in my life.”  Lennett expects toy sales will continue to climb in stride with the rise in coronavirus cases and get another boost from the strong possibility that schools around the country will return to online-based learning, delay school openings or stagger student schedules. (Chart from cnbc.com, data from NPD Group)


The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.

The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence.  There are additional risks associated with investing in an individual sector, including limited diversification.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.


July 20th, 2020

U.S. Markets: The major U.S. indexes ended the week mixed.  Nothing “mixed” about the benchmark large cap S&P 500 index, however, which marked its third consecutive week of gains and reached levels not seen since the market sell-off began in late February.  The Dow Jones Industrial Average rose nearly 600 points to finish the week at 26,672, a gain of 2.3%.  The technology-heavy NASDAQ Composite retreated -1.1% following back-to-back weekly gains of more than 4%.  By market cap, the large cap S&P 500 added 1.2%, while the mid cap S&P 400 and small cap Russell 2000 each gained 3.6%.

Commodities: Gold continued its rally.  The precious metal rose a sixth consecutive week, adding 0.5% to finish at $1,810.00 per ounce.  Similarly, Silver finished up 3.7% to $19.76 per ounce.  Oil’s huge rally from the depths of April continued to sputter.  West Texas Intermediate crude rose 0.5% to $40.75 per barrel.  The industrial metal copper, known as “Dr. Copper” by some analysts for its alleged ability to forecast global economic trends, closed up for a ninth consecutive week, rising 0.24%.

U.S. Economic News: The number of Americans seeking first-time unemployment benefits hit a post-pandemic low last week, but layoffs are expected to rebound as states impose business restrictions.  The Labor Department reported initial jobless claims fell by 10,000 to 1.3 million.  Economists had expected 1.24 million new claims.  Continuing claims, which counts the number of people already receiving benefits fell by 422,000 to 17.34 million.  That reading is the lowest since mid-April.  Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote in a note, “The trend in initial jobless claims has now just about stopped falling.  Next week could easily see an increase, for the first time since March, in the wake of the continued gradual re-imposition of restrictions across the South and parts of the West.”

Confidence among the nation’s home builders rose in July as Americans look to leave the big cities in favor of the suburbs.  The National Association of Home Builders (NAHB) reported its monthly confidence index rose 14 points to a reading of 72 in July.  Readings above 50 indicate improving confidence, while numbers below represent a declining outlook.  In April, the index had fallen to its lowest level since June 2012.  In the details of the report, expectations of current single-family home sales jumped 16 points to 79.  Builders’ views on the traffic of prospective buyers moved 15 points higher to a reading of 58.  Expectations of home sales in the next six months improved by a smaller amount, rising only seven points to a reading of 75.  NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla, said in the report, “Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean.”  

The nation’s small business owners grew more optimistic last month, however a fresh spike in coronavirus cases and tightening restrictions in states such as California and Texas may snuff out hopes for a faster economic recovery.  The National Federation of Independent Business (NFIB) reported its Small Business Optimism Index jumped 6.2 points in June to 100.6—its biggest gain since December 2016.  The reading took the NFIB index closer to where it was in February, just before the start of the recession.  The surge in optimism reflected the partial reopening of the economy and the impact of the “Paycheck Protection Program” loans.  However, with the recent spike in COVID cases, analysts expect some of this optimism to reverse in the coming months.

Increases in the price of food and at the gas pump lifted consumer prices for the first time in four months in June.  The Bureau of Labor Statistics reported its Consumer Price Index (CPI) rebounded 0.6% last month.  Economists had expected a reading of 0.5%.  Energy prices surged the most in 11 years jumping 5.1%, while food prices advanced 0.6%.  Gasoline is still fairly cheap, however, with prices down more than 23% compared to a year earlier.  Core CPI, which excludes the volatile food and energy categories, rose 0.2% - also slightly above the consensus of 0.1%.  Year-over-year, core CPI eased to just 1.2%, its slowest pace since February 2011.  Despite the Federal Reserve’s massive monetary stimulus in response to the coronavirus pandemic, analysts don’t expect inflation to become a problem anytime soon.  Michael Gregory, Deputy Chief Economist at BMO Capital Markets wrote, “Inflation is not going to be an issue for a long while.”

Sales at the nation’s retailers posted a big increase in June, the second consecutive increase.  The Commerce Department reported retail sales climbed 7.5% last month, following a record 18.2% increase in May.  Economists had expected a 5.4% increase.  Sales, however, still have yet to return to pre-crisis trends.  In the report, sales jumped 8.2% at auto dealers, which have gotten a big boost from plunging interest rates.  Sales also increased 15.3% at gas stations largely because of a steady increase in the price of oil after it fell to an 18-year low earlier in the year.  If autos and gasoline are stripped out, retail sales still rose a robust 6.7% last month. 

The Federal Reserve’s Beige Book, a collection of anecdotal reports from each of the Federal Reserve’s member banks, showed economic activity increased in almost all districts.  One caveat: business contacts remained highly uncertain about the outlook for the U.S. economy, as it was unclear how long the crisis would last.  Overall, while the Beige Book was more positive than its prior report in May, there was no sense that the economy was out of the woods.  Tom Simons, economist at Jefferies wrote, “Although the early days of the “reopening” were quite strong and quite encouraging, that pace of activity is not sustainable.  Getting back to any sense of a normal pace of economic activity is going to take a long time, and there is an enormous amount of slack that the economy needs to absorb before any sort of policy response is warranted.”

Business activity in the New York region increased in July for the first time since the pandemic began in March according to the New York Fed’s Empire State Manufacturing Survey.  The Empire State business conditions index rose to 17.2 in July, its first positive reading since February.  A reading above zero indicates improving conditions.  Economists had expected a reading of 8.9.  Forty-one percent of manufacturers reported that conditions were better in early July than in June, up from 36% in the prior survey.  Overall, the Empire State index has improved steadily since hitting a record low of -78.2 in April.

Finally: When measuring the “value” of a currency, most think of a traditional yardstick such as gold.  However, economists sometimes also look at more readily and widely available commodities for their studies.  The Economist just released the latest version of its Big Mac Index, which tracks the cost of a McDonald’s Big Mac around the world.  In this year’s Big Mac Index, you’ll find that the Swiss are paying the Swiss Franc equivalent of $6.91 for a Big Mac, making it the most “expensive” Big Mac on the planet.  But Big Mac fans everywhere might be glad to know that to know you can still get a Big Mac for less than two bucks…in South Africa.  There, you’ll pay just the Rand equivalent of $1.86! (Chart by chrtr.co, data from The Economist)


(Sources:  All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet.) 

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.  Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.

Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal.

The NASDAQ Composite Index is an unmanaged index of securities traded on the NASDAQ system.

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

The Consumer Price Index is a measure of inflation compiled by the US Bureau of Labor Studies.


July 13th, 2020

U.S. Markets: The major U.S. indexes ended the week mixed, with large caps outperforming small caps.  The technology-heavy NASDAQ Composite outperformed the other major indexes by rising 4.0% to a new record high of 10,617.  The Dow Jones Industrial Average rose 1.0% finishing the week at 26,075.  By market cap, the large cap S&P 500 finished the week up 1.8%, while the mid cap S&P 400 and small cap Russell 2000 retreated -0.3% and -0.6%, respectively.  Despite numerous short bursts of outperformance, small and mid caps have yet to mount a sustained period of outperformance and remain substantially negative for the year to date at -14.7% for the Russell 2000 small cap index and -14.1% for the S&P 400 mid cap index.

U.S. Economic News: The number of Americans seeking first-time unemployment benefits fell to a four-month low, but layoffs still remain far above their average level at the beginning of the year.  The Labor Department reported initial jobless claims fell 99,000 last week to 1.314 million.  It was the fourteenth decline in a row.  While below the forecast of 1.388 million, claims remain high and more than double the peak reached during the financial crisis of 2008.  Continuing claims, which counts the number of Americans already seeking benefits, fell by 698,000 to 18.062 million.  More than 50 million new claims have been filed since mid-March.  Before the pandemic the states processed fewer than 225,000 claims a week.

The services part of the economy roared back in June as businesses were allowed to reopen, pointing to a gradual recovery after the extended coronavirus lockdowns.  The Institute for Supply Management (ISM) reported its index of non-manufacturing companies surged a record 11.7 points to 57.1—well above the consensus forecast of 50.1.  The index hit its highest level since February, before the shutdown of the economy in response to COVID-19.  Analysts noted that the reading confirms economic activity is rebounding, and that the recession that started in February has likely ended.  Similarly, research firm Markit reported its U.S. Services Purchasing Managers’ Index (PMI) rose 10.4 points in June, to 47.9.  Unlike the ISM index it remained below 50, but nonetheless showed significant improvement from just a few months ago.  The services side of the U.S. economy is huge, employing more than 80% of all American workers.

At the wholesale level, the cost of goods and services fell last month, reflecting the depressed demand in retail and other parts of the economy.  The Bureau of Labor Statistics reported the Producer Price Index declined -0.2% last month.  Economists had expected a 0.4% increase.  Wholesale inflation has fallen -0.8% over the past year.  In contrast, wholesale inflation was rising at a 1.6% annual pace just a year ago.  Another measure of wholesale inflation known as core PPI, which excludes food, energy, and trade margins, rose 0.3% last month.  It was the biggest increase since January.  Analysts note that despite the Federal Reserve pumping huge sums of money into the economy, inflation is likely to remain low until the crisis is over.  Lydia Boussour and Gregory Daco at Oxford Economics wrote in a research note, “The PPI decline confirms inflation should be the least of our worries.”

Senior Federal Reserve officials stated unemployment is likely to remain high despite the surge in rehiring and that the central bank may have to do more to help the labor market.  San Francisco Fed President Mary Daly noted the coronavirus pandemic has decimated key parts of the economy such as travel, tourism, hotels, restaurants, and retail.  Those industries lost millions of jobs in the early stages of the pandemic, and few have come back so far.  In a virtual chat held by the National Association of Business Economists, she stated “I am assuming [unemployment] will level off at someplace we don’t want to be.”  Thomas Barkin, president of the Richmond Federal Reserve, concurred. “I don’t believe my favorite restaurant will be back to full staff. I don’t think my favorite retailer will be back to full staff.”

Finally: Complications from COVID-19 are known to be more severe in older populations and observers have speculated whether COVID-19 will force or at least encourage older workers to retire as early as they can.  Analysts believe the answer is ‘yes’.  For many years, financial advisors have been encouraging pre-retirees to wait as long after age 62 as possible before claiming Social Security benefits, in order to maximize the benefits and extend the wage-earning years.  Beginning about the year 2000, a steady decline in the percent of 62 year olds claiming social security benefits began, and has since dropped by about half, from the 60% range to the 30% range.  During the Great Recession, though, the percentage of 62-year-olds claiming Social Security spiked from 42.2% in 2007 to 46.9% in 2009 before again dropping back to the downtrend.  Analysts expect this pattern to repeat itself in the wake of COVID-19.  In fact, preliminary data from the monthly Current Population Survey shows that an uptick in earliest-possible retirements and social security claims has already begun.  Chart from Center for Retirement Research, Boston College.

 


(Sources:  All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet.) 

 

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.

Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence.  There are additional risks associated with investing in an individual sector, including limited diversification.

The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.

The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.

Any opinions are those of the author, The Sherman Letter, and not necessarily those of Raymond James


July 6th, 2020

U.S. Markets: U.S. stocks recorded solid gains for the holiday-shortened week, helping to lift the technology-heavy NASDAQ Composite Index to a record intraday high.  The large cap S&P 500 hit its highest level since mid-June.  The week closed out the best quarter for the Dow Jones Industrial Average and the S&P 500 since 1987 and 1988, respectively.  The Dow Jones Industrial Average added 812 points to finish the week at 25,827, a gain of 3.2%.  The NASDAQ added 450 points and finished at 10,208, a 4.6% increase.  By market cap, large caps led the way with the S&P 500 adding 4.0%, while the mid cap S&P 400 and small cap Russell 2000 rose 3.5% and 3.8%, respectively. 

June and Q2 Summary: For the month of June, the NASDAQ Composite was the clear winner, gaining 6.0%, followed by the small cap Russell 2000, up 3.4%.  Large caps, mid caps, and the Dow rose 1.8%, 1.1%, and 1.7%, respectively.  For the second quarter there were double-digit gains across the board.  The NASDAQ surged a huge 30.6%, followed by the small cap Russell 2000, up 25.0%.  The S&P 400 and S&P 500 gained 23.5% and 20.0%, respectively, and the Dow Jones Industrials added 17.8%.

All of the major ex-US global markets finished the month of June to the upside.  Canada’s TSX rose 2.1% and the UK’s FTSE added 1.5%.  France’s CAC 40 rose 5.1% and the DAX gained 6.2%.  China’s Shanghai Composite jumped 4.6%, while Japan’s Nikkei ended the month up 1.9%.  Emerging markets recovered 6.6%, while developed markets gained 3.5%.  For the quarter, the DAX led the way adding 23.9% followed by the Nikkei, up 17.8%, and the TSX up 16%.  France, the UK, and China rounded out the bottom three with 12.3%, 8.8%, and 8.5% gains respectively.  Developed markets rose 15.5%, while emerging markets gained 17.9%.

For the month of June Gold and Silver rose 2.8% and 0.8%, respectively.  Oil added 10.7%, while copper surged 12.3%.  In the second quarter of the year, Gold rose 9.7%, Silver rallied 30.7%, and oil skyrocketed 73.3%.  Copper finished the second quarter up 9.1%.

U.S. Economic News: The number of Americans filing first-time unemployment benefits continued to slow last week, but remained above the consensus expectation.  Initial claims for unemployment insurance fell by 55,000 to 1.427 million.  Economists had expected a reading of 1.380 million.  It was the 13th consecutive decline, as labor market conditions continued to improve with the reopening of the economy.  Continuing claims for unemployment benefits, which counts the number of Americans already receiving benefits, rose by 59,000 to 19.290 million.  The unemployment rate fell to 11.1% in June from 13.3% in the prior month.  More than 50 million new claims have been filed since mid-March.  Before the pandemic, claims averaged around 225,000 per week.  

Another 4.8 million Americans went back to work in June sending the unemployment rate down to 11.1%, the Bureau of Labor Statistics reported.  The increase in new jobs exceeded economists’ forecasts of 3.7 million.  Millions of people have returned to work since the states began to reopen in May.  However, the survey used to compile the report took place before the latest wave of new coronavirus cases erupted.  The U.S. lost more than 22 million jobs during the height of the pandemic and has restored about 7.5 million of them in the past two months.  Analysts were quick to caution against expecting these strong numbers to continue.  Sal Guatieri, senior economist at BMO Capital Markets wrote in a note to clients, “The end of the lockdowns has allowed for a faster than expected recovery in jobs in the past two months, but more recent events and data suggest much tougher slogging ahead.”

After two consecutive months of declines, an early measure of housing demand staged a historic rebound.  The National Association of Realtors (NAR) reported its index of pending home sales soared 44.3% in May—its largest monthly percentage increase on record.  The result led many analysts to conclude that the worst may have already come for the real-estate market.  Lawrence Yun, chief economist for the NAR, stated “This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership.”  The index measures real-estate transactions for previously-owned homes where a contract was signed but the sale had not yet closed.  Analysts use the pending home sales data to get an “early read” on actual sales in the near future.

Home-prices have maintained a steady upward trajectory according to data from S&P CoreLogic.  The S&P CoreLogic Case-Shiller 20-city price index posted a 4% annual gain in April, up 0.1% from the previous month.  On a monthly basis, the index increased 0.9% between March and April.  Phoenix continued to lead the country with an 8.8% annual price gain in April.  Seattle was next, with a 7.3% gain, followed by Minneapolis, where home prices rose 6.4% over the past year.  Prices were weaker in the Northeast.  Overall, the pace of price growth increased in 12 of the 19 cities Case-Shiller analyzed (Detroit wasn’t included because transaction records were unavailable, the report noted). 

Confidence among the nation’s consumers jumped to a 3-month high, but remains well below pre-pandemic levels.  The Conference Board reported its index of consumer confidence rose to 98.1 in June.  Economists had expected a reading of 90.8.  However there’s one potentially big caveat.  The cutoff date for the survey was June 18th, shortly before states such as Texas and Arizona re-imposed new restrictions after a new outbreak of COVID-19 cases.  The level of confidence remains well below pre-crisis levels after steep declines in March and April.  The index had stood near a 20-year high at 132.6 in February before the pandemic shut down swaths of the economy.  It fell to a low of 85.7 in April.

Manufacturing activity rebounded strongly in June according to the Institute for Supply Management (ISM).  ISM reported its Manufacturing Index surged 9.5 points in June to 52.6.  Economists had expected a reading of 49.5.  It was the biggest jump since August 1980 and to the highest level in over a year as factory activity returned to growth mode after the COVID shutdown.  In the details, thirteen of the eighteen ISM industries grew indicating a broadening expansion.  Most ISM components increased led by near-record jumps in new orders and production.  Supplier deliveries slowed at a slower pace, which was a positive development as it reflected diminishing supply chain issues.

Finally: As America celebrates its Independence Day, more and more Americans are dependent on Amazon.  The e‑commerce behemoth’s stock has one of the largest market capitalizations , and its president Jeff Bezos is (by far) the richest man in the world.  Everyone knows that Amazon is big in the retail space, but just how big may surprise many.  VisualCapitalist created an infographic showing Amazon’s valuation compared to the country’s nine next-largest retailers.  In short, the market valuation of all of the next nine companies, from Costco to Walmart, added together still lag Amazon’s by almost half a trillion dollars.


(Sources:  All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet.) 

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.  Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.
Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
The S&P MidCap 400® provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500®, measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow”, is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal.
The NASDAQ Composite Index is an unmanaged index of securities traded on the NASDAQ system.
The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.
FTSE Indexes are unmanaged indexes and show the performance of the United Kingdom and the European markets over a period of time.
The Nikkei 225 is a stock market index is for the Tokyo Stock Exchange (TSE). It is the most widely quoted average of Japanese equities.
The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse.
The DAX 30 is a Blue Chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.
The Shanghai Stock Exchange Composite Index is a capitalization-weighted index that tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange.
The S&P/TSX composite index is the Canadian equivalent to the S&P 500 market index in the United States. The S&P/TSX composite index represents about 70% of the total market capitalization on the Toronto Stock Exchange (TSX).
The MSCI is an index of stocks compiled by Morgan Stanley Capital International. The index consists of more than 1,000 companies in 22 developed markets.
The MSCI Emerging Markets is designed to measure equity market performance in 25 emerging market indices. The index's three largest industries are materials, energy, and banks.


In the ever-changing landscape of finance we must ensure our clients are properly invested based upon their investment goals and objectives.

Peter Chapman




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