- US coronavirus cases jump by one-day record of 62,000. Death toll also shows signs of rising for first time since new outbreak in south and west
- Texas had its second straight day of record virus deaths, at 98, bringing total fatalities in the state to 2,813. Virus cases rose 4.7% to 220,564, exceeding the seven-day average of 4%. The 9,979 new cases were second only to yesterday’s record of 10,028. Hospitalizations jumped by 324, or 3.5%, which was less than the seven-day average of 5.2%. Texas hospital occupancy at more than 90%
- 56 Florida ICUs hit full capacity
- The top health official in Tulsa, Oklahoma, said that President Donald Trump’s June 20 campaign rally and accompanying protests likely boosted the number of coronavirus infections in the area. Tulsa County reported 261 and 206 cases for Monday and Tuesday, eclipsing Tuesday’s seven-day rolling average of 146.7.
- California reports record jump in new cases
- Los Angeles County reported 2,496 new coronavirus cases, bringing its total to more than 123,000, along with 65 additional deaths. “We are at a very critical juncture in our pandemic,” Barbara Ferrer, the county’s public-health director, said at a press briefing. The county, home to 10 million people, has been the hardest-hit part of California. The rate of positive tests has jumped to 10.4% on a rolling seven-day average, a level not seen since late April. Ferrer warned that thousands more people may require hospitalizations that could overwhelm the health-care system if infections numbers aren’t brought under control.
- Cases rise in 33 states (Axios)
- Dr Birx urges states with worst outbreaks to revert to phase 1 reopening
- States with over 40% of the population have now put reopening on hold, and states with another 30% have already reversed part of their reopening. (GS)
- NYC schools won’t reopen in September, mayor says
- Japan Braces for Virus Rise
- Indonesia Sees Record Virus Cases After Military Outbreaks
- Iran Records Deadliest Day Since Start of Pandemic
- Hungary Mulls Border Curbs on Eastern Europe Surge
- Hong Kong Local Virus Cases Surge
- Germany’s Infection Rate Drops Further
- Mexico saw record daily rises in cases three times in the last week as it moved forward with reopening the economy. It has surpassed Spain and France to become the country with the fifth deadliest outbreak.
- WHO finally admits there’s “some evidence” of airborne transmission as US severs ties
- This chart ranks the countries with the most confirmed new cases over the past week, adjusted for population size, and treats each U.S. state as if it were a country. (Many states are larger in both landmass and population than some countries.) (NYT)
PANDENOMICS
As Businesses Reopen, Many Americans Plan to Spend Less
More than 40% of people who spent money on movies, event tickets or at bars before the pandemic now plan to spend less on those activities, according to a new survey for CreditCards.com. (…)
More than 60% of small businesses said they needed spending to return to normal by the end of the year to stay open, according to American Express data, but the pandemic may have longterm effects on spending habits. While business owners have found creative ways to bring in money during the shutdowns, half of Americans aren’t looking forward to going back to a bar, and more than one-third aren’t excited about heading out to a sports game, movie or live event, according to a recent survey by Bloomberg and MorningConsult. (…)
While many plan to spend less on movies, sports and concert tickets, dining out and haircuts, some plan to spend more on charity (28%), housekeeping (26%) and child care (32%). (…)
When they do spend money, 59% of respondents said they were tipping more, going to local businesses more than usual or paying for services even when those services couldn’t be provided.
U.S. Consumer Credit Continues to Decline
Consumer’s are pulling back as unemployment rises. Consumer credit outstanding fell $18.3 billion (+0.8% y/y) during May following a $70.2 billion April decline, revised from $-68.8 billion. An $18.0 decline had been expected by the Action Economics Forecast Survey. It was the third consecutive monthly shortfall.
Revolving consumer credit balances declined $24.3 billion (-7.6% y/y) in May, the fourth decline in five months. (…) Nonrevolving credit usage rose $6.0 billion (3.8% y/y) during May. It reversed half of the $12.0 billion April shortfall which had been the first decline since August 2011. (…)
United Explores 45% Cut to U.S. Staff as Travel Slumps United Airlines said it could be forced to shed almost half its U.S. workforce, telling 36,000 employees that they could be furloughed from Oct. 1 because of the pandemic-driven slump in passenger demand.
Fed officials suggest U.S. recovery may be stalling
In separate appearances, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren and Richmond Fed President Thomas Barkin noted what Barkin characterized as “air pockets” facing the U.S. economy – businesses exhausting existing order books without refilling them, and households facing the end of unemployment benefits and other support. (…)
But, “new orders are not coming on line in the same way. We have fiscal payments … that are coming to an end and it is not clear what is going to replace them.” (…)
The CFO Survey Shows Business Confidence Beginning to Rebound as Firms Grapple with Effects of COVID-19
- When survey participants were asked between June 15 and June 26 to rate the financial prospects of their firms on a scale from 0 to 100, the average optimism level was 69.8. When asked to rate their optimism about the overall U.S. economy, the average index was 59.8. Both indexes indicated improvement from the first quarter.
- Firms’ concerns about revenue appear well-founded. In a special question we asked this quarter, the average firm expected the COVID-19 pandemic to lower their 2020 sales revenue by nearly 15 percent. As the histogram below shows, these expectations are somewhat diffuse but clearly skewed toward a negative impact. Nearly 10 percent of respondents anticipated the coronavirus pandemic would cut their 2020 sales revenue in half. That said, almost 15 percent of firms anticipated that the coronavirus will boost their sales revenue this year.
- Relative to the pre-COVID period, firms’ employment levels are a little more than 5 percent lower on average. Firms anticipate hiring modestly over the second half of the year and then hiring at a stronger pace in 2021. However, these survey results suggest that the pace of hiring over the next 18 months is insufficient to bring the average firm back to its pre-COVID employment level by the end of 2021.
Rosengren sees more US businesses needing Fed rescue Central bank’s Boston chief says Main Street lending facility may need to be extended
U.S. Budget Gap in June Nearly Matched Entire Fiscal 2019 Deficit The U.S. budget deficit totaled $863 billion in June, nearly as much as the entire gap for fiscal year 2019, as federal spending tripled to combat the coronavirus pandemic and tax revenues plunged.
China’s Economic Dragon Is Spitting Fire Again The Asian giant, felled by Covid just months ago, appears to have pulled off a remarkable turnaround and may be set to drive another economic cycle.
John Authers on Bloomberg takes clues from equity, commodity and forex markets to conclude that China’s economy is back on the right track. Axios reports that the IIF is a little more cautious:
While Chinese services sector data has rebounded, according to official and private sector data, IIF economists warn, “Consumption is still heavily disrupted. Retail sales are significantly below pre-COVID-19 levels and look U-shaped at best.” (…) manufacturing makes up nearly 30% of its economy, compared to around 10% for the U.S., according to the latest data from the World Bank. Services, driven by things like retail sales and restaurants, make up a little over half of China’s GDP versus more than three-quarters of GDP for the United States.
Today:
The China Association of Automobile Manufacturers is set Friday to forecast a drop of 10% to 20% in wholesales for this year, a smaller decline than the 15% to 25% it predicted in May, according to a person familiar with the matter.
Earnings Forecasts Are Too Dire, but Still Proceed With Caution Analysts’ expectations for S&P 500 earnings seem far too pessimistic since they haven’t adjusted for a partial economic rebound, but stocks might have priced that in already
With results about to start rolling in, analysts polled by Refinitiv estimate that second-quarter earnings at companies in the S&P 500 will show a drop of 43.9% from a year earlier. (…) There is a tendency for analysts to set a low bar for earnings even in normal times. In the second quarter that tendency may have gone into hyperdrive. This is because the bulk of the downward revisions happened early in the quarter, before it was clear that the economy had started bouncing back. That bounceback hasn’t spurred many upward revisions. (…)
The pickup in industrial activity that was reflected in the Institute for Supply Management’s better-than expected June manufacturing report last week seems not to have registered. (…) the Commerce Department’s May retail sales report, released in mid-June, showed a much bigger bounce from April than economists expected. Even though credit-card data suggest sales have softened recently as coronavirus caution flags have gone back up, spending in June still looks to have improved from May’s level. (…)
We have 17 Q2 reports in, companies with a March-May quarter (10 consumer-centric and 2 Industrials). Their aggregate earnings are down 18.3% (82% beat rate and a +0.9% surprise factor) on a 2.3% decline in revenues.
In early April, the first 18 reporters showed aggregate earnings down 8.9% (72% beat rate and +6.6% surprise factor) on revenue growth of +5.2%.
Adjusted earnings for Walgreens third fiscal quarter (comprising the three months ending in May) came in at 83 cents per share, down 43.5% YoY. That was well shy of the Wall Street consensus estimate of $1.18 per share. Group revenues rose 0.1% to $34.6 billion, just below analysts’ projections for $34.35 billion. Company Cuts 4,000 Jobs. (ZeroHedge)
I expect second quarter reports to be messy accounting-wise. Reuters says that “some investors had begun to speculate on whether companies globally may report earnings before interest, taxes, depreciation, amortization – and coronavirus, or “EBITDAC,” which would add to the uncertainty surrounding the profit picture.
U.S. Companies Slashed Dividends at Fastest Pace in More Than a Decade
Shareholders were notified of a net $42.5 billion reduction in dividends on common stock in the second quarter, according to S&P Dow Jones Indices. That comprised $6.7 billion in increases and $49.2 billion in decreases.
The net reduction is the largest since the first quarter of 2009, when the total was $43.8 billion. Some of the recently announced cuts took effect in the second quarter, while others begin during the current quarter, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
In total, 41 companies in the S&P 500 have suspended their dividends this year to conserve cash during the pandemic. (…) S&P Dow Jones Indices now projects dividend payments for the year to decline in the low single-digit percentages, versus its call at the end of last year for a high-single-digit gain. (…)
TECHNICALS WATCH
S&P 500 Large Cap Index – 13/34 (CMG Wealth)
From Pat:
