Monday Market Recap: July 27, 2020
Market Recap
Highlights
US retail sales rise 7.5% in June vs 5% expected and home sales rise 20.7% in June from previous month
US set to release second Coronavirus aid proposal Monday afternoon
What may be the most important day of the year, July 30 marks several key release data including Q2 GDP, consumer confidence surveys, and earnings for Apple, Alphabet, and Amazon
Activity has started to normalize in both Europe and North Asia, albeit with localized lockdowns to contain virus clusters. The pandemic is still spreading in the U.S. and many emerging markets. The state of California recently replaced New York in total cases and daily averages with over 450,000 cases and an average daily incidence of 13,000 cases. The unprecedented policy response has boosted risk assets and safe havens such as Gold, recently reaching above its all time high in 2011. Europe has agreed on a historic recovery fund, while the US is still working on an agreement with both sides of the aisle for its second coronavirus relief package. Wrangling over the size and makeup of a new fiscal package has started as key benefits are set to expire July 31st and states face huge budget shortfalls. We could see a $1-1.5 trillion fiscal package that extends some (but not all) federal stimulus measures through late-2020.
Although US retail has risen over the month of June vs May, the number of airport travelers has started to fall again and restaurant bookings have been flat. While consumers are feeling increasing confidence in spending and retail, reticence for mobility remains as most states are currently reporting a rise in cases (and therefore an increased risk for slowdown in the case of a lockdown). Current TSA checkpoint numbers are showing current traffic at 27% of what levels were 1 year ago, which further illustrates the lack of confidence with regard to mobility.
July 30th will be a major inflection point for the next 6 months and the direction of market activity with several key data releases. Second quarter GDP numbers will be released for the US with Europe’s numbers following the next day. Expectations are for double digit negative growth and will give us the clearest picture to date on the real impact of the pandemic in the US. First quarter GDP contracted 4.8% however this only included March lockdowns. Apple, Alphabet, and Amazon all report earnings July 30 as well and currently account for over 13% of the S&P 500 alone. While earnings may beat expectations, whispers of Antitrust still remain.
What I’m Reading - OpenAI’s Language Generator GPT-3
OpenAI (an Elon Musk backed artificial intelligence research laboratory) has begun early access to its newest language generator: GPT-3. GPT-3 uses 175 billion parameters to produce convincing streams of text from simple prompts. It can write poems, short stories, articles, and design websites without any code required. Right now the co-founder Sam Altman admits that this tool is useful, but still has quite a ways to go. It is a far cry from true intelligence, however the beginning implications are quite far reaching. Click here to have a look at some of the results yourself.
Tool I’m Using – Almanac
Almanac provides crowdsourced templates for everything business. Whether you are looking for a Covid-19 playbook, building a lean startup, or trying to make the best of remote work, you’ll find useful guides, templates, and info on Almanac. An essential tool for every business large and small.
What I’m Listening To – How to Remain Calm When Others Panic
Ryan Holiday is the author of several New York Times best selling books such as The Obstacle is the Way and Ego is the Enemy. He is also a dedicated stoic. Holiday’s newest book is on the power of stillness, which is something we are all experiencing now in one way or another. In this packed podcast with Jay Shetty, Holiday explores this simple concept, and its applications in everyday life. He also tells an insightful story about Kobe Bryant within his last few weeks and what it means to be in control of your time and purpose. Give it a listen here.
Quick Take - Tulsa Remote
How far would you go to escape the city? Would you move to Oklahoma for $10,000? That is exactly what the city of Tulsa is offering plus free office space in exchange for top talent. For some, this may be an offer worth considering with the widespread remote work policies and a growing gig economy. If the trend towards working from home continues, cities like San Francisco, Los Angeles, or New York are unlikely to have as much of the same attraction as they once did. This could have a significant toll on these economies and provide a shift to previously under looked communities.