All Good Things Must Come To An End
The title of this week's Market Recap is a quote attributed to Geoffrey Chaucer, the 14th Century English poet and author. The "good" part was actually added later. That being said, it appears we are inching closer to an end to the dovish Fed stance and could be getting closer to Taper Tantrum again. The Jobs Report last week gives the Fed the leverage needed to begin easing bond purchases, but will they? The market certainly doesn't like the prospect of Tapering beginning. Yet, all "good" things must come to an end.
Last week, the economic data was strong overall. While Vehicle Sales were down (hurt by a lack of supply of computer chips), and ADP came in well below estimates, the Jobs Report showed strong seasonal growth. Approximately 943,000 jobs were added, which was well above the 870k estimate. June's numbers were also revised higher by more than 80,000 jobs. Unemployment dipped more than expected to 5.4%. On top of all of that, Consumer Credit increased, showing that consumer demand remains strong. Factory Orders were higher than expected and the Services indices were higher. Jobless Claims also came in as expected, which was a decline from the previous week.
There are renewed concerns about future growth as COVID cases are on the rise in certain countries. However, the high frequency data here in the U.S. appears to be moving ever closer to pre-pandemic levels. Consumer transactions and Travel are now higher than pre-pandemic levels, while Dining and Hotel Occupancy were within 6-8% of pre-pandemic levels. Air Travel is still 21% below pre-pandemic levels, but has inched higher all year. When looking at what the world is worried about, many countries do not have COVID as their primary concern. In countries such as the U.S., Sweden, South Africa, Russia, Mexico, Columbia, & Italy, crime, corruption, unemployment, and poverty are the primary concerns of those countries' citizens.
It was a good weekend for COVID numbers in the U.S. Saturday's Cases, compared to the previous Saturday, decreased 27% and Sunday's Cases fell 68% versus the previous Sunday. Deaths followed suit as Sat-over-Sat decreased 18% and Sun-over-Sun fell 41%. We'll have to stay tuned to see if it is the beginning of a broader trend. The replication rate for areas hit hardest by the Delta variant also appear to be dropping, which might also foretell of lower cases ahead for the U.S.
Click below to access this week's Market Recap.