Name: Diverging Fortunes - The Rising Tide Doesn’t Lift All Ships
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Diverging Fortunes - The Rising Tide Doesn’t Lift All Ships

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SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.The theme of this week’s report is the stark contrast in the economic recovery for individuals, industries, and countries. We explore the dramatic difference in performance for sectors of the labor market as well as the stock market in what the media has labeled a, “K shaped” recovery because some have made a complete recovery while others are still at or near their low points. Source: Ernie Tedeschi, Evercore ISIIf you would like to receive the Weekly Macro Summary directly to your mailbox every Sunday, please subscribe. It’s free.The S&P500 is up 3.6% year to date while the Nasdaq-100 is up 28.4%.Source: Capital Economics Source: Strategas ResearchMost active fund managers in the US failed to beat the market over the past year.Cruise Lines, (Royal Caribbean, Carnival, Norwegian) Shares of cruise operators responded positively to a research piece by Barclays upgraded that upgraded the sector to overweight from equal weight. BP, Covid-19 concerns outweigh optimism regarding energy transition plan.Atlanta Fed GDPNow is currently tracking at 32.0% for Q3, unchanged from 32.0% last week.New York Fed GDP Nowcast stands at 14.1% for Q3, down slightly from 14.3%% last week.Source: JP MorganExisting home sales for August, 6mln annualized rate, matches consensus expectations and strongest pace since 2006.August new home sales hit a 14-year high, 1.01mln units (annual rate) sold vs 890k expected. Up 43% versus last year.Source: CitiSource: WSJRichmond Fed Manufacturing stronger than expected, +3 points in August to 21, (consensus expected a 6 point decline.)Source: Richmond Federal Reserve BankUS preliminary manufacturing PMI: 53.5 from 53.1 while services PMI: 54.6. Both in line with estimates.The Eurozone preliminary manufacturing PMI  53.7 in September versus 51.7 in August.Source: JP MorganUS initial jobless claims to 870k from 866k a week ago.US Durable goods orders +0.4% m/m for August weaker than +1.5% expected. Global car sales are experiencing a sharp recovery in Q3. By the end of August they had rebounded 68% from the low point of the year. Source: Macquarie BankWhat is fueling the so-called, “K-shaped” recovery? The state of the labor market is vastly different for middle to high income earners versus those in lower income brackets. As new home sales soar to a 14-year high, auto sales rebound sharply and retail sales exceed their pre-COVID levels, we think it will be critical to watch the employment numbers and distribution of the recovery for various wage earners. Source: Ernie Tedeschi, Evercore ISISource: Opportunity InsightsSwiss National Bank leaves rates unchanged, threatens more intervention to cap appreciation of the Swiss Franc.Norway's central bank left rates unchanged and provided forward guidance that their base rate would be at today's level for “some time.”Hungarian central bank raises rates from 0.6% to 0.75% in order to combat weakness in their currency, the Forint. Turkey surprised markets with a rate hike. Move their benchmark rate from 8.25% to 10.25% to stem outflows and try to short circuit the currency’s depreciation (see Geopolitics section for more). Source: BofA September 2-year Treasury auction, $52bln, is slightly weaker than AugustSeptember 5-Year Treasury auction, strong demandSeptember 7-year Treasury auction ($50bln) awarded at 0.462%, almost exactly the pre-auction fair value.U.S. crude oil imports averaged 5.2mln b/d last week, up 160,000 b/d from the previous week.Propane has been the US’s largest petroleum export, 1.2mln b/d through June 30. US Motor gasoline exports still weak. Averaged 735k b/d, down 17% y/y versus 2019. Chinese president Xi Jinping announced at the United Nations that his country will aim to cut its net carbon footprint to zero by 2060.  Source: QuartzUganda, Tanzania, and Rwanda are merging their stock markets electronically to ease the cost and time difficulties of cross-border trading. The project has been in development for almost 10 years.International healthcare companies are struggling to reclaim ~$2.3bln in debts owed to them by Turkey’s state hospitals, a senior US official has revealed.In past weeks (and the section above) we have summarized how the market has been behaving rationally in allocating money to winners and losers during the COVID downturn. In a piece entitled, “The Stock Market Is Less Disconnected From the ‘Real Economy’ Than You Think”, Nathan Tankus does a stellar job of diving further into this idea by contrasting year to date equity returns against year to date company performance: Source: “Notes on the Crises”, Nathan Tankus Citi: A contentious outcome of the US election is an underappreciated risk.This weekly summary expresses the views of the author as of the date indicated and such views are subject to change without notice. The author has no duty or obligation to update the information contained herein. Further, the author makes no representation, and it should not be assumed, that past investment performance is an indication of future results.Moreover, wherever there is the potential for profit there is also the possibility of loss.This weekly summary is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources.The author believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based.This weekly summary, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of the author.© 2020 Primary Dealer. See , andThis site requires JavaScript to run correctly. Please or unblock scripts

SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.The theme of this week’s report is the stark contrast in the economic recovery for individuals, industries, and countries. We explore the dramatic difference in performance for sectors of the labor market as well as the stock market in what the media has labeled a, “K shaped” recovery because some have made a complete recovery while others are still at or near their low points. Source: Ernie Tedeschi, Evercore ISIIf you...

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Diverging Fortunes - The Rising Tide Doesn’t Lift All Ships

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