Current Trends in U.S. Equity Strategies
This year, if your U.S. equity strategy is showing positive returns, it’s likely due to substantial investments in large-cap growth or momentum factors. As of July 9, 2020, these two strategies are the only ones generating gains, as per data from various exchange-traded funds. The rest of the strategies have largely resulted in losses.
U.S. Economic Recovery and Coronavirus Impact
Economists emphasize that the recovery of the U.S. economy is contingent upon effectively managing the coronavirus. Key developments include:
- Record numbers of COVID-19 related deaths in the Sunbelt region: Bloomberg
- A new round of stimulus checks may be in the pipeline for U.S. workers: CNBC
- Concerns raised about the economic implications of the vaccine development race: CNBC
- An increasing focus on sustainability trends among wealthy investors: CNBC
- Another leader in South America tests positive for COVID-19: NY Times
- Supreme Court ruling on Native American land rights in Oklahoma: BBC
- Jobless claims have exceeded a million each week for the 15th consecutive week: CNBC
The Federal Reserve’s Yield Curve Control Analysis
The Federal Reserve has indicated that it is exploring the idea of yield curve control (YCC), and various analysts have discussed its potential implications. The steady trend in the 10-year Treasury yield raises the pertinent question: Has YCC already been implemented?
International Relations and COVID-19 Developments
China’s top diplomats send conciliatory signals even amid rising tensions with the U.S.: CNBC
Rigid enforcement of face-mask regulations amid surging COVID-19 cases in the U.S.: Reuters
The Supreme Court rules extending worker exemptions for healthcare regulations: WSJ
The Supreme Court prepares to rule on access to President Trump’s tax records: Politico
Australia suspends its extradition agreement with Hong Kong: NYT
United Airlines announces potential layoffs for up to 36,000 employees: BBC
Easing of industrial deflation in China amid rising commodity prices: MW
A slower decline in U.S. consumer credit in May signals an economic rebound: MW
Gold prices continue their upward trend, approaching record highs: Bloomberg
China’s Stock Market Performance
In 2020, China’s stock market is experiencing significant growth, driven in part by a recent surge in prices. Analysis using U.S. exchange-listed funds to reflect major global equity markets indicates that Chinese shares have significantly outperformed others, as of July 7.
COVID-19 Updates and Predictions
The World Health Organization warns of emerging evidence regarding the airborne transmission of the coronavirus: CNN
New COVID-19 cases in the U.S. have surged to a record high, hitting 60,000 on July 7: WSJ
Dr. Fauci advises against complacency regarding the low COVID-19 death rate: NW
FBI Director criticizes China’s cyberattack activities against the U.S.: CNBC
China expresses willingness to engage in arms control discussions with the U.S. and Russia: Reuters
Gold prices reach $1800 an ounce, the highest since 2011: CNN
Questions arise regarding the sustainability of the long-short equity strategy concept: Bloomberg
Job openings in the U.S. rose unexpectedly in May: Bloomberg
Evaluating the U.S. Economic Recovery
The U.S. economy shows signs of recovery. The growth observed so far primarily reflects a bounce-back effect following a significant and abrupt decline in output. Recent data indicate that the recession triggered by COVID-19 has hit its lowest point and a recovery is in motion. However, the sustainability of this rebound remains uncertain, mainly due to the ongoing implications of the pandemic.
Cautious Outlook for COVID-19 Vaccine
Dr. Fauci expresses caution regarding the COVID-19 vaccine’s effectiveness: MW
Atlanta Fed Chief highlights a plateau in economic recovery in certain areas: Bloomberg
The White House releases details on companies that received bailout loans: CNBC
The Supreme Court permits states to impose penalties on Electoral College voters: CNN
The OECD projects that unemployment will rise to its highest levels since the Great Depression: WSJ
Big Tech in Hong Kong ceases processing government data requests: NY Times
German industrial output sees a rise in May: Reuters
ISM Non-Manufacturing Index shows significant growth for June: ISM
A sentiment-based GDP proxy indicates substantial recovery in June relative to May: IHS Markit
Recovery of U.S. Real Estate Investment Trusts
After experiencing three consecutive weeks of losses, U.S. Real Estate Investment Trusts (REITs) rebounded last week, showcasing the most substantial gains among major asset classes, according to various exchange-traded funds.
Global Stock Markets Respond to China’s Revival
Global stock markets have rallied to a four-week high, fueled by the optimism surrounding China’s economic recovery. However, states like Texas and Florida are grappling with ‘exponential’ increases in COVID-19 cases. Economic analysts indicate that a ‘V-shaped’ recovery is unlikely in the latter half of 2020. Additionally, U.S. crude production is declining at an unprecedented rate. Further positive news comes from the Eurozone, where retail sales saw a sharp rebound in May. Furthermore, German factory orders have also bounced back after a three-month hiatus. Notably, investor Warren Buffett’s Berkshire Hathaway has made a significant acquisition in Dominion Energy’s natural gas assets: CNBC
