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Week Ending July 17th 

Markets
Most of the major indexes closed in positive territory last week with the exception of the NASDAQ closing the week down -114.25 points. Retail sales rose strongly with restaurants and other retail stores opening in June. However, it may not be enough just yet to keep many of them from closing permanently. Unemployment has stabilized, however food banks across the country struggle to keep up the demand from the out of work population. Mortgage rates have crossed the 3% threshold as the 30-year fixed rate fell to 2.98%. California shut down its economy as cases of the virus increased.

 The Economy
Market observers are now using high frequency data markers to gauge the state of the economy. Sometimes, even small deviations from expectations in the economic data results in outsized financial market reaction.
• Retail Sales: While falling -5.5% from the week ending July 4th (holiday week) to the week ending July 11th, retail sales were still +4.7% higher than the same 2019 week, and up +7.5% M/M in June (May was still in the depths of business closures). On the surface, this looks promising. But, let’s not forget that consumer income has not yet been impacted because of government money drops. As discussed below, there are still 32 million people unemployed, and there will likely be a large negative impact when government largesse returns to “normal” (perhaps after the elections);
• Hotel Occupancy (week ended June 27th): While up from the April lows, there is only 46.2% occupancy vs. 84.9% a year earlier;
• Open Table (July 13): this indicator shows a -66.2% Y/Y change. The M/M change was -1.2%; looks like the daily media drumbeat on new cases has had an impact;
• TSA checkpoint data (July 13): This shows the number of air travelers, and it was up 5.2% W/W and 61.7% M/M. But, because the denominator is so small, the percentage changes become almost meaningless. Y/Y traffic is still off -73.2%. No wonder United and American Airlines are throwing in the towel and have pre-announced significant layoffs.
The conclusion here is that, after an initial pop, and especially with renewed business restrictions, the Recovery, at best, has flattened.

US Home construction Jumps 17.3% in June
The Commerce Department reported Friday that new homes were started at a seasonally adjusted annual rate of 1,186,000 in June after a modest recovery in May followed steep declines in April and March. Even after a second straight month of increases, construction activity remains 4% below last year’s pace.
Applications for building permits, a good indication of future activity, rose 2.1% to 1.24 million units. Source: https://www.cnbc.com/2020/07/17/housing-starts-june-2020.html

Dallas Federal Reserve President Robert Kaplan said the U.S. will see above-trend growth next year.
Dallas Federal Reserve President Robert Kaplan said the U.S. economic growth will accelerate next year as the country rebounds from the coronavirus crisis. I still believe if we follow these protocols, we would see a rebound from the deep hole we dug in the second quarter. The Fed president said the most important thing for the economy now is wearing protective face coverings. In recent weeks, many states in the U.S. have seen a resurgence in new cases and hospitalizations as the economy started to reopen. Source: https://www.cnbc.com/2020/07/14/feds-kaplan-says-the-us-economy-will-see-above-trend-growth-in-2021.html

First human trial of Oxford coronavirus vaccine shows promise

An experimental vaccine being developed by AstraZeneca and Oxford University against the new coronavirus produced an immune response in early-stage clinical trials, data showed on Monday, preserving hopes it could be in use by the end of the year. Source https://www.reuters.com/article/us-health-coronavirus-oxford-vaccine/first-human-trial-of-oxford-coronavirus-vaccine-shows-promise-idUSKCN24L1MP

PPP Loan Insurance is a Thing—Here’s What to Know
Businesses that accepted a Paycheck Protection Program (PPP) loan to keep their doors open during the coronavirus pandemic may be asking for another round of forgiveness soon.
They may face liability if U.S. Small Business Administration (SBA) audits to determine their business was unable to meet the required “necessity certification,” or should have considered alternative sources of liquidity prior to applying for a PPP loan. According to CNBC, more than 4.4 million businesses received loans from the SBA in both rounds of the PPP program. Source: https://401kspecialistmag.com/ppp-loan-insurance-is-a-thing-heres-what-to-know/

When you reopen your office these links may help
Below are some links to government websites with helpful information
https://www.cdc.gov/coronavirus/2019-ncov/community/guidance-business-response.html
https://www.osha.gov/Publications/OSHA3990.pdf
https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws

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