Summer is officially here. Last week was a low volume week for the market as we eased on into the Memorial Day weekend. This week the trading is shortened by the holiday. Chicago once sang about the Summertime, "I've been waiting such a long time," in their hit "Saturday in the Park." I think everyone shares that sentiment after the 15-month long pandemic. It will be interesting to see next week what some of the Memorial Day metrics provide, but heading into the holiday, it looks like people were expecting some sense of normality.
The economic data was mixed last week. For the 4th consecutive week, Jobless Claims declined and inched closer to getting below the 400,000 level. The last time Claims dipped for four consecutive weeks was late October/early November of 2020. The market will be eyeing this week’s Jobs Report to see if good news forces the Fed to put tapering and rates back on the table. The Consumer data was mixed last week. While Consumer Spending and Consumer Sentiment were flat-to-higher, Personal Income and Consumer Confidence were lower. Inflation, labor shortages, and supply chain issues are certainly weighing on the consumer. The Richmond Fed Manufacturing Index and Chicago PMI were both improved month-over-month as manufacturing continues to show improvement. We’ll get more manufacturing data this week, along with Factory Orders, which could give a hint at how the supply-demand battle is progressing as we come out of the pandemic. It will be interesting to see how the retail numbers look after this weekend to see if demand was met by the current labor & supply availability. This balance is critical as we move forward.
The COVID numbers continue to decline and states are re-opening and getting back to normal. The High Frequency Data suggests people are spending at levels seen prior to the pandemic and travel is back to pre-pandemic levels. So far, Oil is responding to the higher demand as the commodity is nearing $70/barrel - a level not seen since 2018. Restaurants are nearing the pre-pandemic capacity levels, but labor shortages have hampered sales and are causing some restaurants to limit hours of operation. Hotel Occupancy and Air Traffic still have further to go, but positive progress is still being made.
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