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Contents Click on the links below to get to the stuff you really really want. USA – Virus numbers up, investors impatient; Tech stocks up; Housing data negative (#USA) UK – Stocks down on virus worries; CBI’s manufacturing data negative (#UK) Continental Europe – German virus cases up, but focus on potential for deal with EU on payments (#Europe) Elsewhere – US disagrees with itself; Stocks up on hopes of US China raprochement (#Elsewhere) WTF – Distancing in the pub (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Investors continued to struggle with the same factors yesterday; virus numbers were up but folk are hoping that it won’t be serious and, if it is, that the authorities will pump lots of money into the system.
It feels a bit like watching Geoffrey Archer during a sprint race. If you’ve not seen the YouTube video, it’s worth a watch: he keeps false starting and not being penalised before running to victory. The parallel that I see is a bunch of investors who are trying to jump the gun so that they don’t miss out on any gains. The trouble is, stock prices have rebounded pretty quickly despite economic damage having been done and virus numbers picking up.
There are some signs that the understanding of and ability to treat Covid-19 is improving, but there is still no definitive treatment and cases are rising, especially in the southeast of the US.
About that economic damage, the latest data did not make for pleasant reading: sales of existing homes plummeted while the Chicago Fed’s national activity index crawled into positive territory. Not the stuff of dreams, but investors love to dream hence the S&P 500 closed 0.6% higher. Tech companies continued to dominate as folk seemed to think that they’d come out as winners no matter what happens. That also meant that the tech-heavy Nasdaq Composite closed 1.1% higher. It’s all a bit weird at the moment.
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UK
It was less weird in the UK where the FTSE 100 and FTSE 250 closed 0.8% and 0.6% lower on the day. Virus fears seemed to be taken more seriously on the eastern side of the Atlantic.
Hopes were further knocked by the latest manufacturing data from the Confederation of British Industry. The CBI’s total orders balance stayed deeply in negative territory which just means that demand for manufacturing goods remains “lower than normal”. But the survey shouldn’t be relied on too heavily because it deals in very broad brush strokes and has a history of missing how quickly situations recover. Still, it didn’t help the mood.
Retailers and travel companies continued to have a hard time as far as stock prices were concerned, while house builders and gold producers did well.
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Continental Europe
Germany is among the countries experiencing a rise in virus cases, but investors were focusing more on the low likelihood that strict lockdown measures would be imposed. So stock prices fell modestly to leave the Euro Stoxx 50 and German DAX 0.8% and 0.5% lower respectively.
There was a glimmer of hope that the friction between Germany and Brussels might be alleviated soon. German Finance Minister, Olaf Scholz, reckoned that it would be resolved with Berlin having the final say. That might be bluster to please voters, but investors seized the positive sending auto-related stocks up which helped to offset some of the losses in other sectors.
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Elsewhere
This morning, stocks have been coping with the US administration disagreeing about the future relationship with China. Trump aide, Peter Navarro, said that the trade agreement signed in January was over. He then said that his context had been taken wildly out of context while Trump chipped in saying that the deal was “intact”.
So the mood picked up and took stock prices with it. Hong Kong’s investors appeared to be particularly relieved as the Hang Seng added 1.3% on the day. Much of the rest of the region was up more modestly, but the mood today appears to be rather more upbeat than it was yesterday.
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WTF (What’s The Fact?)
Distancing in the pub
A whole new environment will be upon us in pubs soon. The pubs will be open, but a one-metre distancing rule will be imposed. So the usual repartee of aggression between drunkards will have to be adjusted. An accusation of, “Oy, you (nearly) spilled my beer” will be followed by “Come (almost) over here and say that”, then “Right. Outside” before two men stand outside a pub one meter apart flailing their arms uselessly at each other. Should be fun.
The great thing is that, with a combination of inebriation and impatience, there’s absolutely no danger that people will stand within one metre of each other…
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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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