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Contents Click on the links below to get to the stuff you really really want. USA – Extended financial stimulus from Fed and government lifted expectations and stock prices; Retail sales up and widely available drug might help virus victims; Bond investors more reticent (#USA) UK – Disappointing jobs data couldn’t distract investors from US stimulus news (#UK) Continental Europe – Chinese virus resurgence worried investors for only a few minutes (#Europe) Elsewhere – Most stocks modestly higher (#Elsewhere) WTF – Getting to the bottom of accusationsA (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
The focus shifted to financial stimulus and away from the reason it’s needed. The number of Covid-19 cases continues to pick up again across states that are releasing lockdown measures, but who cares when there’s so much dosh being thrown around by the government and the Federal Reserve (US equivalent to the Bank of England)?
The Fed is extending its bond-buying programme to include buying individual corporate bonds as opposed to just buying huge volumes of government bonds (and some corporates) at once. This lifts the potential for Fed intervention substantially, meaning that it could inject loads of new cash into the financial system to help ensure that there is lots of money for people to borrow cheaply as they tide themselves over during the economic downturn.
Trump wasn’t about to give up on his re-election hopes. So the $1 trillion infrastructure package appears to be more likely. It will mostly be for the usual selection of bridges and roads, but it will also encompass spending on 5G wireless and rural broadband. So conspiracy theorists can accuse Trump of creating Covid-20 by connecting people to the internet.
The other good news came in the form of the 17.7% month-on-month rise in retail sales in May alongside rises in industrial production and manufacturing output. The numbers are all still lower than their pre-Covid levels, but they are rising as lockdown restrictions are lifted.
Finally, there were signs that dexamethasone (already a widely available drug) might help critically ill coronavirus patients.
So stocks were up, up and away. The S&P 500 closed 1.9% higher with every sector posting a gain. This was the picture for the UK and Continental Europe as well, so if you’re in a hurry you can stop here.
Bond investors were less easily convinced. Risk levels are still very high and virus cases are picking up, so demand for benchmark 10-year Treasuries (US government bonds) remained steady.
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UK
Nobody was paying much attention to disappointing UK jobs numbers because investors were watching much the same indicators as their US counterparts. That sent the FTSE 100 and FTSE 250 up by 2.9% and 2.2% respectively with every sector in both index posting a gain.
Trump’s stimulus led sentiment yesterday, even as data showed that total hours worked in the UK fell at a record pace with an extra 6 million people staying off work, filling the parks and generally irritating hard-working, under-appreciated freelance writers. Meh.
However, those people have not been able to stock up on hot lard at Greggs because the cholesterol chain is battering landlords for better rental terms before re-opening a bunch of stores for takeaway services (well, you don’t want them having myocardial infarctions in the middle of the shop now do you?).
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Continental Europe
Folk across the Continent did take note that China was struggling to contain the latest virus outbreak, but it didn’t have much tempering effect. The Euro Stoxx 50 and German DAX both registered very solid 3.4% gains on the day. Every sector of both index rose and, indeed, every company on the DAX closed higher.
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Elsewhere
Japanese stocks gave back some of yesterday’s gains this morning as tensions on the Korean peninsula combine with Chinese battle agains a virus resurgence to deliver some sobriety to investors there.
The rest of the region is posting modestly positive gains on benchmark stock indices with one predictable exception. The tech-heavy Taiwan 50, which follows its US tech masters around so loyally, is 1.9% up at the time of writing.
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WTF (What’s The Fact?)
Getting to the bottom of accusations
Trump attempted to stall another accuse of molestation by him in his office by lining up the potential accusers to see if he could identify any of them.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
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