Week Ending 5/15/2020


US and international stocks both fell by about 2.5% and the bond market was up by 0.50%. The overall US stock market as measured by the VTI has now traded in a range between 137.5 and 147.5 since April 9.

The economy continues to tailspin but maybe we hit bottom. We emphasize the word “maybe” as it is certainly too early to say that, but a preliminary reading of the University of Michigan Consumer Confidence ticked up. The Empire State Manufacturing Index came in at -48.5, but that was up from -78.2 in the prior month, and above the expected -63.5. Mortgage applications have increased for the fourth straight week. Let’s remember the absolute level of these indexes is dismally low. And there was still plenty of terrible economic news.

Retail sales were down by a seasonally adjusted 16.4% from a month earlier. It was the biggest drop since the early 1990s. Manufacturing output dropped by 13.7% in April, the largest monthly decline since 1919. Three million more people applied for jobless benefits. The 8-week tally totals 36.5 million unemployed.

Then, to make matter worse, the US decided this was a good time to ramp up the trade war with China, by disallowing Huawei Technologies access to semiconductors that use US technology. That led to speculation that China would retaliate against big US tech companies like Qualcomm, Cisco, or Apple.

Let’s not forget that a trade war that was ramped up in the midst of recession helped turn the 1930s into the Great Depression. Let’s hope for a better outcome this time.