Monday Musings: June 1, 2020

Jun 01, 2020

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Public Trust Credit Team
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Demonstrators take to the streets in dozens of U.S. cities as protests and unrest sweeps across the nation

Despite enforced curfews and the presence of the National Guard in some states, protests sparked by the death of George Floyd continue to escalate throughout the country. President Trump is scheduled to speak with law enforcement officials and governors on Monday as some demonstrations, many of which started as peaceful protests, erupted in violence and looting. From an economic standpoint, the timing of the demonstrations could not be worse for cities and companies in major cities that had high hopes of resuming normal operations at the start of the month. Companies like Amazon, Target, and Apple were forced to scale back deliveries and shut down hundreds of their brick-and-mortar stores as mounting tensions give rise to new public safety concerns. Public health experts also fear that the demonstrations, which have seen thousands of people gather together in close proximity, could trigger a new outbreak of COVID-19 infections. Perhaps more focused on the lifting of state lockdown measures, the market appears relatively unphased by the intensifying protests with major U.S. stock indices up to start the week.

Economic data continues to look horrific but some recent reports show signs of promise

The U.S. Institute for Supply Management (ISM) Manufacturing Index came in at 43.1 today versus the 11-year low of 41.5 for the month prior, creating some hope that the worst may be over and manufacturing is past the bottom. Both figures remain below the 50 mark threshold for expansion, but the slight uptick carries signs of optimism. Furthermore, the initial jobless claims survey due on Thursday is expected to improve from prior reports, with a median estimate of 1.8 million claims versus 2.1 million claims for the week prior and potentially dramatic improvements in comparison with the 6.9 million weekly claims reported on March 27. Some current economic data support the theme that while the data is weak, trends are starting to improve as all 50 states are open or reopening in some capacity. That said, the unemployment rate coming out this Friday is expected to be miserable, approaching the 20% mark versus 14.7% reported at the end of April. Though the domestic U.S. economy shows indications in some areas of a gradual rebound,most of the data is still historically catastrophic and has a ways to go before the country is on sure footing once more.
All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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