Jumping off the Fiscal Cliff
The recovery is officially “W”-shaped
- Jack Farley
- July 24, 2020
- 6:30 PM
In Europe the PMIs are showing signs of a sustained recovery…
…and numbers coming out of Germany and France look particularly strong.
Meanwhile, the U.S. reported its PMIs and they were nowhere near as robust.
The services PMI increased to 49.6…
…while the manufacturing PMI reached a six month high of 51.8.
And the composite figure of manufacturing and services together is right smack at 50.0.
Remember, a reading above 50 indicates growth in output. So the Composite figure being right at 50.0 means the private sector is exactly on the knife’s edge between expansion and contraction.
Housing/Fiscal
In the world of residential real estate, we did see some promising news. Sales of previously-owned homes was up 20.7% month-over-month.
But renters and landlords are facing an entirely different set of challenges.
The missed payment rate continues to inch higher, according to Apartment List. It now stands at a record 32%, meaning that for the first week in July, almost one in three renters failed to pay their rent.
During that same period, renters could turn to unemployment benefits. But these programs start to expire next Sunday, and over 25 million Americans will be cut off from this assistance over the next week.
In other news, the Russian central bank cut lowered its key rate to a record low of 4.25%.
Goldman finally settled its 1MDB case with Malaysia – but the stock price barely moved on the news.
Brooks Brothers received a bid from Sparc Group to buy the bankrupt entity at $305M. This is quite a tidy sum, to be sure – but there could be other suitors, such as the Italian Giglio Group, or even WHP Global, a syndicate of Blackrock and Oaktree. It’ll be interesting to see if there will be another bid before the August 5th deadline.
And lastly, gold rides higher, soaring past the 1900 level to set a new record…
Meanwhile the U.S. Dollar index continues its slide….
If you’re interested in these topics there are two Real Vision interviews you need to watch. One is Hugh Hendry and Luke Gromen, who did a masterclass on the dollar. That came out today. And then on Tuesday, the great Lyn Alden will be back to provide an update on her views on the gold, silver, bitcoin, treasurys, and of course, the almighty dollar.
