6/21/2020: Weekly Wrap-up and What to Expect

Markets improved modestly as we heard mixed news regarding the U.S.’s economic recovery. On one hand, we saw retail sales increase by ~18%, Democrats unveil a $1.5T infrastructure plan, and Oxford researchers discover that a cheap steroid can reduce the death rate in severe COVID patients. On the other hand, WHO warned of COVID re-acceleration globally and Apple temporarily closed select stores that were recently reopened in states with rising COVID cases. Here are the details:

  1. 📈 Retail sales jumped 18% in May as sales increased at restaurants, malls, and other sectors hit hard by COVID. While retail sales are still down significantly as compared to last year, state re-openings enabled retail businesses to meet pent-up demand from consumers. Government support and a return to work have helped increase consumers’ discretionary spending power, which we saw in action in May. We hope to see this continue in upcoming months and support economic recovery.

  2. 📈 Oxford researchers discovered that dexamethasone, a cheap generic steroid, reduces death rates in severe COVID patients by one-third.  This data is much more encouraging compared to Gilead's remdesivir, which only demonstrated a reduction in duration of hospitalization. Dexamethasone is now another weapon to healthcare workers’ arsenal that will be available immediately, and may blunt death rates if a second wave emerges.

  3. 📈 Democrats revealed a $1.5T infrastructure plan that could create millions of new jobs in the U.S. The "Moving Forward Act" is a $1.5T infrastructure plan aimed at repairing roads and bridges, and expanding broadband to rural areas. Part of the initiative is to help create millions of jobs to counter COVID-related job losses, so this new act bodes well for economic recovery. However, Republicans on the committee were frustrated they were not included in its crafting so we'll need to keep an eye out on how everyone reacts.

  4. 📉 Apple re-closes 11 stores across the U.S. in areas with rising COVID cases. Apple announced that it would close 11 stores (only recently reopened) across the U.S. due to a resurgence in nearby COVID cases. Apple has the luxury to make this decision as it relies more heavily on online sales rather than its physical stores. Analysts believe that other businesses with less of an online presence may not have the same luxury and will not close unless ordered by local authorities. We will keep an eye out to see if other companies follow suit.

  5. 📉 The WHO warned that COVID cases are accelerating globally and in a new and dangerous phase. On Thursday, the WHO reported the highest number of new global COVID cases in a single day to-date. The WHO director-general warned that the world is entering a new and dangerous phase with COVID is accelerating quickly. However, the major contributors to this spike are primarily South American countries, rather than the U.S, which is still reporting a steady decrease in daily COVID deaths despite the recent increase in COVID cases. 

WX Capital is still confident in a steady U.S. economic recovery. Increased retail sales and unemployment numbers in May indicate the beginnings of an economic recovery. Furthermore, scientific advancements in COVID vaccines and treatments have continued to show promise. The fact that COVID deaths are still decreasing in the U.S. despite increasing daily cases is a promising indicator that we're engaging COVID cases earlier and managing cases better. Finally, select businesses may be forced to close stores in areas of local COVID case spikes, but the stores in unaffected areas will likely remain open as they need to generate business. As always, please don't hesitate to reach out with questions!

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