Insights

Top News:

9/21: Investor sentiment was dampened by amplified election jitters over SCOTUS nomination (here), congressional impasse on yet another fiscal initiative (here), and threat of renewed lockdown in Europe (here).

 

9/22: Hitting an annual rate of 6 million, existing home sales rose 10.5% from a year ago, with median home prices benefiting from tightening inventory.  After weeks of decline, new Covid cases are growing by 5% or more in 29 states and D.C.

 

9/23: By one measure, economic activity in both Eurozone (here) and the U.K. (here) decelerated in September, particularly among consumer-facing industries due to resurgent Covid infections.  Johnson & Johnson became the fourth drugmaker to enter into Phase 3 clinical testing of its vaccine under U.S. government auspices. 

 

9/24: As demonstrated by the latest jobless claims report, prospects for a steady job recovery remain mixed.  Separately, spurred by accommodative rates, new home sales in August soared above an annual rate of 1 million for the first time since 2006.

 

9/25: In its attempt to re-ignite stalled negotiations, House Democrats are reportedly preparing a slimmed-down stimulus plan totaling $2.4 trillion.  In another signal suggesting a waning economic rebound, durable goods orders rose a modest 0.4% in August, 1.1% lower than expected.

 

Heard on the Street:

“We think high-yield, dividend-paying stocks pose a huge opportunity for longer-term investors: quality, compounding companies with sustainable and growing dividends should be increasingly sought after in a world where income from bonds is so scarce.”

— Ben Kirby, portfolio manager at Thornburg Investment Management, as quoted by MarketWatch on 9/22/2020

 

“By serving as a backstop to key credit markets, our programs have significantly increased the extension of credit from private lenders…Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. In these cases, direct fiscal support may be needed.”

— Jay Powell, Fed Chairman, in House testimony on 9/22/2020

 

Longer Game:

The re-framing of the Fed’s monetary guidance has caused consternation in some quarters; in a rare dissent from the central bank’s September decision, Dallas Fed President Robert Kaplan expressed his concerns for “building up excess risk-taking” by market participants.

 

The globalization of China’s financial markets continues as its government bonds are slated for inclusion in a major index, estimated to attract at least $100 billion in foreign investment flow.

 

Bonus:

The New York Fed’s Weekly Economic Index, comprised of 10 coincident indicators, hints at a slowdown in U.S. recovery since late August.