Economic Bounce
Economic activity around the world is stabilizing. Information shared from purchasing managers showed service-sector and manufacturing output recovering in much of Europe and Asia this month, a welcome sign after record-low readings in March and April. The improvement offers some hope of a broad-based return to growth this summer as coronavirus-related restrictions continue to ease. Even so, the outlook is mixed. Japan's service sector showed signs of life but manufacturing output worsened, leaving its composite purchasing managers index in contractionary territory. U.K. and French manufacturing returned to growth, but demand remains weak. Taken together, those are indications of a difficult recovery and lengthy spell before a return to prepandemic levels of economic output
Home Sales
Sales of previously owned homes dropped 9.7% in May from the prior month as the coronavirus pandemic kept shoppers indoors during the typically busy spring homebuying season. Sales have plunged since hitting a 13-year high in February. The May closings represent the lowest annualized sales activity since October 2010. But record-low interest rates have lured buyers off the sidelines in recent weeks, economists and brokerages say, and they expect sales to pick up starting in June. Source https://www.wsj.com/articles/may-u-s-home-sales-dropped-9-7-as-pandemic-kept-shoppers-indoors-11592835285
Gold Prices
Gold prices approached a new 7½-year high. Front-month gold futures for delivery in June rose 0.6% to $1,756.70 a troy ounce on the Comex division of the New York Mercantile Exchange, closing just below their highest level since October 2012. Prices are up 16% for the year, boosted by coronavirus-related economic uncertainty, and expectations for more stimulus spending and ultralow interest rates. Source; https://www.wsj.com/articles/gold-prices-climb-amid-virus-uncertainty-11592834170
Global Economy outlook downgraded by IMF
Economists at the International Monetary Fund now say the global economy will contract even more sharply than they expected in estimates released in April, which called for the steepest recession since the Great Depression. April estimate of 3% predict the global economy will shrink by 4.9%
Most countries are beginning to emerge from the lockdowns imposed around much of the world beginning in March to stem the spread of the novel coronavirus, and in many cases there are encouraging signs that large numbers of workers are returning to work and economic activity is stabilizing or even picking up.
Hopes for a “V” shaped Recovery are all but gone with the run-up in new infections and the state and local government reactions to back-down or at least pause the reopening phases; the equity markets are just waking up to this reality as seen in continued market volatility with the VIX remaining higher than 30;
Employment is not recovering as fast as had been hoped, and there are still oncoming obstacles in the form of rising bankruptcies and the likelihood of more layoffs after PPP ends. However keep in mind many employees are not looking to return to work with the extra $600/week check the government is giving them. This can been seen mostly in the hospitality Industry.
There have been over 100 million missed debt payments; while some forbearance programs may remain (like federal student debt loan forbearance), private sector programs are likely nearing the end of their forbearance lives;
Bankruptcies are on the rise; not good news for banks, employment, or the shape of the Recovery.
